SiriusPoint Ltd. (SPNT) Q2 2025 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to SiriusPoint's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, and a replay is available through 11:59 p.m. Eastern Time until August 18, 2025. With that, I would like to turn the call over to Liam Blackledge, Investor Relations and Strategy Manager. Please go ahead.

Thank you, operator, and good morning or good afternoon to everyone listening. I welcome you to the SiriusPoint Earnings Call for the 2025 Second Quarter and Half Year Results. Earlier this morning, we released our earnings press release 10-Q and financial supplements, which are available on our website, www.siriuspt.com. Additionally, a webcast presentation will coincide with today's discussion and is available on our website. Joining me on the call today are Scott Egan, our Chief Executive Officer; and Jim McKinney, our Chief Financial Officer. Before we start, I would like to remind you that today's remarks contain forward-looking statements based on management's current expectations. Actual results may differ. Certain non-GAAP financial measures will also be discussed. Management uses the non- GAAP financial measures in its internal analysis of our results and operations and believes that they may be informative to investors, engaging the quality of our financial performance and identifying trends in our results. However, these measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Please refer to Page 2 of our investor presentation and the company's latest public filings with the Securities and Exchange Commission for additional information. I will now turn the call over to Scott.

Thanks, Liam, and good morning, good afternoon, everyone. Thanks for joining our second quarter and half year 2025 results call. The second quarter has seen SiriusPoint deliver continued strong performance. Our underlying return on equity for the quarter was 17%, 2 points ahead of our across-the-cycle 12% to 15% target range, driven by strong underwriting and targeted growth. Year-to-date, our underlying return on equity of 15.4% is at the upper end of our target range despite heightened first half losses in aviation and first quarter losses from California wildfires. The second quarter core combined ratio of 89.5% is a 3.8 point improvement year-over-year, further evidence of our focus on producing consistently strong and improving results. This marks our 11th consecutive quarter of underwriting profit. We also grew our gross written premiums by 10%, representing our fifth straight quarter of double-digit gross premium growth as we continue to allocate capital selectively towards attractive opportunities in the markets that we operate within. Premium growth is strong on a net basis as well, increasing 8% in the quarter and 14% in the first half of the year. Within our Insurance & Services business, we saw net premium growth of 15% in the quarter. This is at a faster pace than gross premiums as we deliberately retain more premiums on our own balance sheet from our MGA partners. This is in line with our prudent strategy of increasing our retention as these relationships season and mature and as we get increasing confidence with the performance and underwriting margin. This approach is an important proof point of our underwriting discipline. In the first half, we've seen double-digit growth in Accident & Health, Property and other specialties lines of business whilst decreasing our premiums within casualty as we remain deliberately cautious. We continue to expect our Insurance business to grow more than Reinsurance. In the quarter, we entered 4 new MGA partnerships. Three of the 4 new opportunities were expansions with existing long-term partners who we know well and share a commitment to underwriting excellence with. Deepening long-term proven relationships is a key part of our MGA strategy. Our selection of new partners is also a key part of our process, and we continue to reject over 80% of all opportunities we see in this distribution channel. We're excited by the pipeline of opportunities we see and are proud of our increasingly strengthening reputation as a partner of choice for MGAs. This was recognized during the quarter at the Program Manager awards in New York, where supported by our partners, we won Program Insurer of the Year. Turning now to our underwriting performance. We delivered the combined ratio for our core business of 89.5% for the second quarter, contributing to our year-to-date core combined ratio of 92.4%. As I said, our second quarter result is a 3.8 point improvement year-over-year. And of this improvement, 1.8 point comes from improvement in our attritional loss ratio in line with our recent trend, marking the sixth consecutive quarter of year-over-year attritional loss ratio improvement. The quarter's results contain no catastrophe losses versus 1 point in the second quarter of last year, whilst favorable prior-year development continued to be strong. Looking at reserve development on a consolidated basis, which includes the development of our runoff business. This marked our 17th consecutive quarter of favorable releases. Turning briefly to our fee-driven profits from our consolidated MGAs, service revenues from our two 100% owned A&H MGAs increased by 16% in the quarter, with year-to-date revenues up 13%. For the half year, the service margin is a healthy and improved 23.6%, which is generating net service fee income of $28 million. Touching on investments, which Jim will cover in more detail. Net investment income for the quarter was $68 million and is tracking in line with our full year guidance of $265 million to $275 million. There were no significant movements on the valuations in our strategic MGA investments in the quarter. Finally, our capital remains strong, and our second quarter BSCR ratio was 223% and within our target range as we continue to deploy our capital to support the organic growth opportunities of the business. Before I conclude, I wanted to take a moment to talk about our people, the real engine of our business. During the quarter, we undertook our annual engagement survey, which showed another year of significant improvements across the metrics. We've included some of the details in Appendix 4 of our presentation. Our Net Promoter Score increased by 16 points year-over-year and 53 points over the past 2 years. We now sit in a very good category. I highlight this business has always been about our people and our culture, and I'm incredibly proud and immensely grateful for the job that they do for our customers and shareholders every single day. The survey highlights that there is a feel-good factor within the company with staff turnover down to 13%. This is a key ingredient for our continued future success. It is also helping us attract talent to the company. And the quarter saw us again attract top talent from across the industry, including 2 new members of my executive leadership team. To end, I'll go back to where I started. This quarter provided us another opportunity to show our progress to becoming a best-in-class specialty underwriter. We continue to consistently deliver strong underwriting profits targeted and disciplined premium growth and stable investment results. We are committed to and relentlessly focus on value creation. Book value per diluted share has increased 4% in the quarter and 10% year-to-date. Our underlying earnings per share for the quarter of $0.66 represents an increase of over 100% versus prior year. And our year-to-date underlying return on equity is at the top end of our 12% to 15% target range. We've made great progress in the first half of this year, but it's only half time in 2025, all to play for in the second half. We're more than ready. With that, I'll pass it across to Jim, who will take you through the financials in more detail.

Thank you, Scott. Turning to our second quarter results on Slide 13. Let me begin by saying we are pleased with our financial results this quarter and for the half year. We meaningfully improved both the reported and core combined ratios. In addition, we generated higher gross and net written and earned premiums. At 89.5%, the core combined ratio improved 3.8 points versus the prior year. The combination of higher premiums, a strong core attritional loss ratio and favorable prior year development produced core underwriting income of $68 million. This is an 83% increase from the second quarter of 2024 and our 11th consecutive quarter of positive income. These items are a testament to the team's strong execution, disciplined underwriting and focused capital management. Moving to net service fee income. As a reminder, following the deconsolidation of Arcadian in the second quarter of 2024, our share of Arcadians profits are reported through other revenues. To normalize for this change, we focus comparison to the 100% owned A&H consolidated MGA businesses. This view highlights a 16% increase in year-over-year service revenues as well as net service fee income increasing 6% to $9 million. The investment result is $69 million. It includes the full impact of the actions taken during the first quarter to support our repurchase activities. Net investment income continues to benefit from a supportive yield environment. We continue to see reinvestment rates greater than 4.5%. Underlying net income is $78 million. This excludes nonrecurring items such as foreign exchange losses. Year-over-year, this is up 35%. Net income for the quarter was $59 million, resulting in diluted earnings per share of $0.50. This includes $17 million in foreign exchange losses, a significant portion of which are noncash items related to period-over-period valuation changes with corresponding offsets within our investment portfolio that are recognized through other comprehensive income. These items are recognized in our income statement when realized. This is consistent with our approach to economically hedge exposures. In summary, our second quarter results demonstrate our ability to profitably grow and create value for our shareholders. Moving to our half year results on Slide 14. Themes are consistent with the second quarter, strong execution, disciplined underwriting and focused capital management produced profitable growth. Underwriting income for the period is $96 million. This includes solid gross premiums written, net premiums written and net premiums earned growth of 11%, 14% and 19%, respectively. The core combined ratio was 92.4%. This represents a slight year-on-year improvement despite elevated catastrophe losses incurred within the first quarter. Net service fee income was $28 million, representing a slight decrease from the prior year period. Our 100% owned A&H consolidated MGAs produced $28 million of net service fee income, which is up 14% versus half year 2024. Net investment income for the first half of the year was $139 million, down slightly from the prior year period as a result of the lower asset base. Lastly, common shareholders' equity increased $168 million to $1.9 billion resulting in diluted book value per share ex AOCI growing 7% or $1 to $15.64. Moving to Slide 15 and double clicking into our underlying earnings quality. Our underwriting-first focus continues to deliver strong underlying margin improvement. The attritional combined ratio chart on the left-hand side of the page strips out the impact from catastrophe losses and prior year development as these inherently vary over time. We believe this metric is useful to examine the quality of our underwriting income. Our 90.9% core attritional combined ratio in the first half of the year represents a 2.3 point improvement versus the prior year period of 93.2%. All facets of the ratio improved. The attritional loss ratio improved 1.1 points. The acquisition cost improved 0.6 points and the OUE ratio improved 0.6 points. Important to note, we continue to benefit from scale from our earned premium growth. For the full year, we remain comfortable with an expense ratio expectation of 6.5% to 7%. The right-hand side provides a bridge from our underlying earnings quality to our core combined ratio. This displays 3.8 points of favorable prior year development in the first half, partially offsetting 5.3 points of catastrophe losses that relate entirely to California wildfires. Turning to our Insurance & Services segment results on Slide 16. Gross written premiums increased $70 million or 14% to $560 million in the quarter, driven by strong growth within our A&H other specialties and property lines. For the half year, gross written premiums increased $181 million or 18% to $1.2 billion. We expect to see existing growth trends persist throughout the remainder of the year. The Insurance and Services segment achieved a combined ratio of 89.3%, a 6.7 point improvement from the prior-year quarter. This was driven by an 8-point decrease in the loss ratio, partly offset by a 1-point increase in the acquisition cost ratio and a 0.3- point increase in the other underwriting expenses. The improvement in the loss ratio is largely due to a 4-point improvement in the attritional loss ratio from our North American P&C business. The quarter also saw no catastrophe losses representing a 0.9 point improvement year-over-year and favorable prior year development of $10 million, representing a 3.1 point improvement year-over- year. The half year result is strong with the combined ratio improving 5.5 points to 91.6%. This result was driven by a 6.3-point decrease in the loss ratio and a 0.4-point decrease in the OUE ratio, partially offset by a 1.2-point increase in the acquisition cost ratio. Similar for the second quarter, attritional losses for the half year represent the majority of the improvement down 4.1 points versus prior year, largely driven by our North American business. Favorable prior year development represented 6.3 points of the combined ratio compared to 3.3 points in the first half of last year and was driven largely by favorable movement within Accident & Health. Our Accident & Health book of business has provided us with a stable source of underwriting profit through the cycle and is a key offering that adds diversification to our portfolio and produces consistently strong results. Premium and the Specialism are up 14% in the first half of the year and represent roughly half of the business mix. In Insurance & Services, rates in U.S. Medical continued to rise at or above loss trend, while personal accident lines continue to see single-digit rate softening. Pricing in Life Reinsurance continues to trend back towards pre-COVID pricing. The pricing environment within A&H continues to meet our risk and return profile, and we continue to see growth opportunities within this specialism. Within Casualty, premiums for the first half of the year have decreased by 10% as we continue to allocate capital towards opportunities to have more attractive underlying margin. The book continues to benefit from positive rate movements exceeding trend, particularly in excess casualty that has seen mid double-digit rate increases. Rates continue to hold firm due to lost cost trends, with industry-wide reserve strengthening, litigation financing and nuclear verdict pressures. We are never afraid to take decisive action to protect the bottom line. Within our auto book, we continue to reduce underwritings and exit businesses where rate is not keeping pace with loss cost trends. Other specialties continued to see strong growth, with surety and environmental both seeing strong year-over-year increases in premiums. Within aviation, major airline renewals continue to see 5% to 10% increases with performance mix between subsegments. Most airline renewals are not due until the fourth quarter at which point the Air India incident will be better reflected in pricing. Space continued to see double-digit price increases, given the significant losses experienced in the market in 2023 and resultant capacity exits. Within energy, rates are a bit of a mixed bag. Energy liability rates remain positive and averaged 5%. Power rates are experiencing mid- to low single-digit rate pressures. Despite this, we believe power remains rate adequate. Within upstream energy, small to medium risk, pricing is roughly flat to down single digit. Rate decreases for larger risks are down by around 10%. Turning to Marine. Rates continue to soften across the board. Cargo and hull generally saw single-digit rate decreases. Rates for marine liability and ports and terminals remain firmer with a range of low single-digit rises to low single-digit reductions. Premiums from our property specialism grew double digit in the quarter and first half. This is driven by growth from MGA programs within our international business and from partnerships entered in 2023 and 2024. Our primary property portfolio is predominantly non- catastrophe and continues to experience rate adequacy. Moving to our Reinsurance segment results on Slide 17. This quarter, the segment saw gross premiums written increased $17 million or 5% to $370 million. Double-digit growth in other specialties was partially offset by reductions in property reinsurance premiums. On a half year basis, gross premium written increased by 2%. On a net basis, premiums written decreased by 1% in the quarter and 4% in the first half. The combined ratio for the quarter improved 0.4 points to 89.8%. The result was driven by a 0.7 point improvement in the acquisition cost ratio and a 0.2 point improvement in the OUE ratio, partly offset by a 0.5 point increase in the loss ratio. The loss ratio increased to 56.6%, partly as a result of a $9 million large loss from the Air India crash, driving attritional losses up 0.9 points versus the prior year. The half year combined ratio of 93.5% contains 2.6 points of improvement in the acquisition cost ratio and 0.6 points of improvement in the OUE ratio. The loss ratio increased 9.5 points from the prior year period, driven largely by the California wildfires from the first quarter. Other Specialties saw 22% gross premium written growth this quarter and 6% growth in net premiums written. Within credit, non-pricing is under pressure stemming from strong performance and ample capacity. The second quarter saw credit spread tightening, which impacted premium levels, while terms remain firm. Within aviation, reinsurance, pricing within excess of loss and pro rata was generally flat, although it is worth noting that Air India incident is not yet reflected in pricing as the majority of 7/1 renewals were already priced when the incident occurred. For Casualty Reinsurance, gross premiums written increased by a modest 2% in the quarter, but are down 6% at the half year. Casualty Reinsurance continued to benefit from positive rate that exceeded trend, but as we guided since the fourth quarter of 2024, we reduced exposures on structured deals and certain casualty classes at 1/1, such as commercial auto, as underwriting discipline led us to reallocate capital to protect underwriting margins. Within Property Reinsurance, premiums decreased 5% in the quarter, in line with the tougher market conditions in this specialism. For the first half, premiums are roughly flat, driven by reinstatement premiums from the California wildfires. We continue to monitor rate adequacy and property reinsurance, particularly following the heightened catastrophe activity in the last 12 months. Important to note, we will only grow premiums where we believe the margins are within our risk and profitability profile with competitive pressures persisting across reinsurance markets. Catastrophe excess of loss placements, have seen the greatest pressure with double- digit decreases across non-loss impacted placements. These accounts had previously seen the greatest rate increases over the prior few years. Proportional business is also competitive, but has seen opportunities particularly for structured deals. Margins are tightening. However, there is still potential in loss-affected segments as improved rate adequacy, legal changes and increased reinsurance availability to support both new and existing carriers entering the market. Slide 18 shows our catastrophe losses versus peers and the reduction in volatility of our portfolio. Following portfolio actions taken in 2022, we have materially decreased our catastrophe exposure in order to deliver more consistent returns to our shareholders. The charts show how we reduced our catastrophe losses in 2023 and 2024 and have continued on this path in 2025. Catastrophe losses in the first half represent 5.3 points of our combined ratio and were driven by the California wildfires in the first quarter with no losses in the second quarter. During the second quarter, our loss estimate for California wildfires decreased by less than $1 million. Of course, it is more useful to view the loss ratios on an annual basis, but our half year 2025 figure already shows a comparatively low loss ratio amongst peers and demonstrates the benefits of our highly diversified portfolio. Moving to Reserving. Our strong history of prudence is shown on Slide 19. Favorable prior year development in the quarter stood at $14 million for the core business versus $4 million in the prior year quarter. It is important to consider our consolidated result here as this includes the business we have put into runoff. We have favorable prior year development on a consolidated basis of $9 million, marking the 17th consecutive quarter of favorable prior year development. Our track record of consecutive favorable releases well exceeds the average duration of our insurance liabilities of 3.1 years, highlighting our prudent approach to reserving. Additionally, we show here the strong level of protection we have on each of our 3 loss portfolio transfers that were completed in 2021, 2023 and 2024. Turning to our strong investment results on Slide 20. Net investment income for the first half of the year was $139 million, down slightly from the prior year period as a result of lower asset base following the settlement of the CM Bermuda transaction in the first quarter. We reinvested over $300 million this quarter with new money yields in excess of 4.5%. The portfolio continues to perform well, and there were no defaults across our fixed income portfolio. We remain committed to our investment strategy, which focuses on high-quality fixed income securities. 79% of our investment portfolio is fixed income, of which 97% is investment grade with an average credit rating of AA minus. Our overall portfolio duration remained at 3 years, while assets backing loss reserves remain fully matched and are at 3.1 years. Moving on to our Slide 21, looking at our strong and diversified capital base. Our second quarter estimated BSCR ratio stands at 223%, decreasing by 2 points versus the end of the first quarter. Our capital position continues to be robust and contain sufficient prudence as shown by the stress test scenario of a 1-in-250-year PML event. Moving on to our balance sheet on Slide 22. We continue to have a strong balance sheet with ample capital and liquidity. During the quarter, the debt-to-capital ratio fell again to 24.4%, driven by an increase in shareholders' equity from the level of retained earnings, partially offset by a weakening of the U.S. dollar, Swedish krona exchange rate, increasing the value of our debt issued in krona. Our debt to capital levels remain within our targets. We continue to have strong liquidity levels, including $682 million of liquidity available to the HoldCo following the final payment of $483 million to CM Bermuda in the first quarter. As a reminder, in the first half of the year, both AM Best and Fitch revised our outlook to positive from stable, while Moody's and S&P affirmed our ratings. Fitch highlighted the significant underwriting improvement in 2023 and 2024 and the completion of the CM Bermuda buyback, while AM Best called out the strength of our balance sheet when making their upgrades. We believe our balance sheet continues to be undervalued. There remains significant off-balance sheet value and the consolidated MGAs, which we own. This was demonstrated when we deconsolidated Arcadian last year and generated almost $100 million of book value. The carrying value on our balance sheet of the 3 remaining MGAs is $83 million with net service fee income for the trailing 12 months of $45 million. This equates to an earnings multiple of just over 2x the earnings versus the double-digit earnings multiple used by the market. With this, we conclude the financial section of our presentation. This quarter saw a continuation of strong double-digit growth in our top line while delivering a 3.8 point improvement in our core combined ratio, of which 1.8 points came from attritional loss ratio improvement. Underlying return on equity for the quarter of 17% contributes to a first half underlying return on equity of 15.4%. This delivery at half year means we are on track to deliver another year with return on equity within our 12% to 15% across the cycle target. We have built a strong track record of delivery, and this quarter's result further validates the significant progress we have made on our journey to becoming a best-in-class specialty underwriter. And with that, I will hand the call back over to the operator, and we can now open the lines for any questions.

[Operator Instructions] Our first questions come from the line of Michael Phillips with Oppenheimer & Company.

First question is on kind of the new programs you've done, I guess, this year, not just this quarter, but this year. Thinking about the impact of those on the top line over the next maybe 18 months of those specific programs on a difference between the growth and the net premiums. And I think it sort of goes to your philosophy, but also some of the comments that Scott made about that difference between taking the net over time. But can you speak to the impact of those specific programs this year might have on both the gross and net premiums over the next 18 months?

Yes. Thanks, Mike. Thanks for the question. I appreciate it. Nice to speak to you. Look, Mike, I would say we sort of take them on a program-by-program basis, which I know isn't a helpful comment for you. But I think we don't sort of forecast ahead. So number one, we choose very carefully, which I know is not the question you're asking, but we keep reinforcing that point. We reject sort of 80% of the opportunities that present themselves. And I think our philosophy is very much we take gross and then lean into net. And so if you look at the pipeline of opportunities. And I would say not just this year, I would go back into sort of last year as well, where we reported quite a lot of new partnerships coming on. I think the way that we look at that is we season them in terms of leaning into the net as and when we feel comfortable. So it isn't really a ready-made formula per se. But I think our direction of travel is we want to take more risk -- net risk with partners who we feel more comfortable with. So I would say we've got a strong tailwind of overall growth as evidenced by our sort of performance over the last 5 quarters, in particular. And I think that trend of sort of net potentially outstripping growth might be something that emerges. But as I say, we don't predict it per se, and we take it as it comes. So look, Jim, anything you want to add to that?

Yes, I think that was well said. I do think on both sides, it will be a tailwind in terms of total growth, but it will really depend on the partnerships, kind of the seasoning at each of those levels, some seasonality with each of those things. So it won't be an exact linear component, but it is, Mike, a tailwind to further growth on both the gross and the net through time.

Okay. I appreciate that. On your Insurance segment, I think of pieces of that, that help your growth over time despite what's happening in the external P&C market because they're kind of noncyclical. And when I think of that, I think the biggest one would be A&H. I guess I want to make sure that's accurate? And then if so, could you maybe highlight some others within there that might have the similar characteristics besides A&H?

So you're right to think of it that way, Mike. So let me just kind of step back and position A&H at public. So obviously, we've seen growth in A&H 25% of that comes from one of our wholly-owned MGA, which is IMG. So actually, when we see growth in our revenue from A&H owned sort of MGAs then ultimately, that manifests itself as well in our sort of premium levels. Look, for me, A&H, the way that we think about that within the portfolio is, obviously, it's a volatility shock-absorber, I think that's a phrase I've used across the market before. So if A&H is growing, it allows us to take more risk in other areas of the business and still maintain our overall lower volatility approach to the portfolio. And that's something that we manage sort of very carefully and very well. And as I said, we feel very confident in the position of our A&H business. I would say -- if you look across other areas, I think we are happy, Mike, to take on risk as long as it aligns with that areas of expertise and specialism. I think, obviously, each one has a slightly different dynamic. So just to try and be helpful to you. I think on property, obviously, we manage our approach to peril quite tightly. Obviously, that's important when we have a sort of lower volatility aspiration. So Property, depending on where we're at on our kind of P&L allocations to peril means that we will toggle up, toggle down. I think Casualty, we are thoughtful and sort of cautious about not because of any specific reason just because I think that's the sort of prudent approach to casualty. We're not scared of it and we've got some very good lines that we write, but I think we are very thoughtful and careful about it. And then in other specialties, like whether it be Surety, whether it be Marine and Energy, whether it be Credit, I think these are opportunities that we can lean into both in some of the general market space, but also through MGA partners as well. So yes, look, for me, I think we feel pretty positive. There are certain areas that we probably wouldn't lean into. So commercial auto would be a good example of that at the moment for us where we just don't think the environment out there is something that we would feel that excited about. I think some program and MGA partnerships give us the opportunity to have an edge there. But in general terms, that might be one that we would be sort of dialing back, dialing down. But the rest, I would say, on balance, we feel reasonably positive about. So a long answer to your question. But Jim, anything you want to add?

Yes. Mike, one thing I would add is really what you've seen from a pipeline growth perspective within our North American franchise. We've obviously established a bunch of strategic partnerships over the last couple of years. And the result of those partnerships is that there's going to be a good tailwind of prudent profitable growth that we would expect to come through there, similar to what you're kind of the about statability that A&H provides, and that's something that's a little bit unique in terms of where we're at from a franchise perspective. It's not that we're not subject to some of the market trends or other, but just from where that segment of our business or that line of business, subsegment, if you will, is within our overall franchise and its life cycle kind of growth maturity perspective. That's going to be a nice stable force or I would expect it to be a nice stable force from a growth and from a profitability perspective as we look forward.

Okay. Last one for me for now, a little bit higher level actually is in your press release, you talked about the international business and specifically the London MGAs. Could you characterize the difference between MGAs and London versus what we see here in the United States? And I ask because you called them out specifically there. So kind of what is the difference? And why there are more growth than what you see in the U.S., that's why I'm asking.

Yes. No, no, look, let me step back. I mean, obviously, in London, Mike, if you go back a few years, strategically when I came here London was declining overall for us. And given the assets that we hold there, i.e., Lloyd's syndicate and managing general agent, et cetera, et cetera, we decided to invest in Lloyd's. We don't obviously just access business in the London market versus Lloyd. We've also got our own paper. And because we've got our own paper, that also makes us attractive to sort of MGAs in the sort of London space and given the wider expertise that we've got across the group, we can leverage that from U.S. into London. In one sense, the hallmarks are not that different. But what we are actually seeing is the pickup as we win business in the London space, which is obviously an area of the business that we would like to invest in and grow. And that's exactly what we're doing, Mike, to be honest. So hopefully, that answers your question. Okay. Operator, next.

Our next questions come from the line of Randy Binner with B. Riley Securities.

I just have a couple. I think the first one for me is just on net investment income. It's trending ahead of your full year guide, I believe. And I think you're putting money to work at a higher rate as the year goes on. Is there just some conservatism in keeping the guide for the year? Can you just share kind of where you're putting new money work so we can just understand that line item a little bit better?

Jim, do you want to take that one?

Happy to. Thanks, Randy. I would say slightly. We're largely online with the plan that we had at the beginning of the year. It does include potential an interest rate cut in the back half to 2 cuts. So at the moment, I think we're largely in past. I would have expected the front part of the year to be a little bit above kind of the back half if effectively some of the Federal Reserve projected kind of market cuts were to come through. And so really no change from that perspective. We do tend to be -- if we think about our range, we do tend to have a range, in particular for this item. And to the extent that there's something that would take us outside of that range or that we would see that coming down, we would then update our guidance at that stage. But I think it's fair to say at this point, as you've noticed, we're kind of at the midpoint, if not slightly higher than that from a range perspective, and we'll continue to work through what is really largely a favorable environment with, again, items kind of being replaced with a yield greater than 4.5%. So I feel pretty good about that.

Okay. Great. That's helpful. And then I have one on reserves. So clearly, the reserve profile is looking good with the continued redundancies. On A&H, I guess it'd be helpful just maybe to learn a little bit more about how the tail on that book develops because it seems like you're getting the majority of the reserve development from there and kind of going through the queue. I'm not seeing that broken out specifically for the quarter, and maybe I'm just not catching it yet. But like how long does a reserve there season kind of versus like casualty lines because mostly what we look at when we look at reserves as analysts, do you think you have -- can provide detail of how that's developing?

Good question, Randy, and thanks. So look, let's step back on A&H. It's, I would say, most seasoned business. It has a long track record of profitable growth. So it's got an 8-year track record of delivering strong returns. That's not perfect in every single year, of course, not. But it really, therefore, points towards a philosophy in A&H. So A&H is the business that we write is pretty short tail. And therefore, sort of on average sort of a couple of years, 2 or 3 years is really what we're looking at. When we look at it, Randy, we tend to err on the side of caution for the current year. So we would tend to reserve slightly higher for the current year and let the older year season. And so what you'll see in our A&H portfolio, if you went back through time is a pretty stable and solid track record of continual prior year releases given the profile, as I've just described it. And as I say, that's all because it's largest area of our business. It obviously operates within our portfolio really importantly in terms of volatility, risk management, as I outlined earlier on. But I think we feel very confident about the quality of that business and the way that we reserve for it. But Jim, anything you want to add to that?

Yes. So building on what Scott said, we tend to know the A&H portfolio results or have a large degree of conclusion within a 2- to 3- year time frame, which means that from an 18- to 24-month perspective, we generally have reasonably seasoned trend that, obviously, we continue to kind of follow through there, but that highlights a component where we would -- once we're more confident at that point in time, then we can begin to kind of think about that from a perspective of essentially enhancing kind of our estimates at that point in time. The Casualty areas tend to be more 4 to 5 years. And so we're really thinking about components when you're looking at that just mechanically. You're not really generally looking at updates unless you're seeing something either negative or other within kind of a 3- to 4-year time period. So just from a natural course of business, you're going to see, as Scott noted, an initial reaction or an earlier reaction from an A&H just because of when you kind of have a real solid indication and kind of know the answer where it's a little bit longer again for those casualty and then we'll begin to react in time. Either way, what I would take away from it is that we have a prudent reserving philosophy as demonstrated by the 17 quarters of favorable prior-year development and highlighting kind of the nature. Nothing has changed in relation to that. And that would be something that I think you'll find as a hallmark of us and something that would be -- when you think about how we look at it, we try to be prudent and thoughtful both on the initial setup of picks and then the picks that we have as we go through time.

Our next questions come from the line of Andrew Andersen with Jefferies.

Just on the casualty within insurance, I think it's about 25% of the premium mix there. And you mentioned it was down 10%, but at the same time, you're getting rate in excess of trend, and it sounds like the pricing environment is good there. So can you maybe just talk about the decision to write less business there? And perhaps remind us when this started, so we can think about when we lap the nonrenewal here?

Yes. Thanks, Andrew. Thanks for the question, it's nice to speak. Look, we're not uncomfortable with casualty. We're just cautious on casualty. And so we've got some very mature MGA relationships. Arcadian being a great example of that where we feel very confident in both the rate and the performance. I think for us, there are certain segments of casualty, I highlighted commercial auto earlier on where for us, we're probably just not really signaling as a sort of a go-forward trend for us. I don't think we are signaling here any big sort of rectifications in casualty. There's nothing that's not what we're flagging. We're just, in general, seeing that we're cautious and where we're cautious, we'll trim at the edges if we feel we have to. But Jim, anything you want to add on Casualty in general?

No, I think what I would highlight is some of you, that we remain disciplined, and this is an indication more of how we're allocating capital to what we see as the most profitable areas in the market, that are within our volatility corridors. And as we've kind of moved forward over the last 12, 18 months, we've seen opportunities in other areas of the book and have appropriately allocated capital to those areas. And again, if we were to see trends or other components, in particular, that are attractive, we'll obviously allocate capital accordingly. And so I really view it as us looking at the market, seeing what we think is attractive and being disciplined about that and not simply saying, hey, we have X amount allocated. So we're going to allocate that much going forward. It's really an indication of how we are committed to writing profitable business and allocating our capital to the areas that we think will produce the best returns for our stakeholders.

And then sticking with primary insurance, I think you mentioned double-digit growth in property, Can you maybe just give us some more color on what the primary property book consists of? Because I guess I'm a little surprised to hear double-digit growth just given the rating environment there, but perhaps this is not E&S, it's not cat exposed, but just maybe any color would be helpful?

So back to the earlier question on London as well, Andrew. So we've obviously picked up some MGAs in London as well. So it's not all U.S. exposed business. So some of it will be exposed to other sort of perils in Europe like European wind, flood, et cetera. But it's back to what I said earlier on, we manage sort of peril exposures very tightly and obviously want to make sure that we don't overexpose any of them in particular. We're also looking at property MGAs, which potentially don't have that type of exposure or where we can exclude certain exposures from those. So look, I would say, in general, it's more of a diversification play as opposed to anything specific, and it's something we manage very, very tightly, given our ambition to be lower volatility. But Jim, do you want to add anything on the MGAs?

No, I think that just represents, as you've highlighted, a little bit of a smaller base, but also just where, again, from an opportunity perspective and as we've kind of further developed our presence in market in the London MGA space that we've had a benefit there that has come through from a property perspective in terms of an area where we think that there's attractive returns on capital and that was good for our franchise.

And maybe lastly, just any change in PMLs at mid-year renewals we should be thinking about into kind of hurricane season here?

No, nothing at all. We've been pretty stable, Andrew, since we went through the restructuring a while ago, very stable. And obviously, key will be, I think, 1/1 renewals next year in property, which I guess everyone is looking at, but nothing of any significance in terms of what we do just sort of normal BAU.

[Operator Instructions] Our next questions come from the line of Anthony Mottolese with Dowling & Partners.

Scott and Jim, thanks for the answers so far with all these questions. I did have a follow-up on the Insurance & Services seeing that net growth outpacing relative to that gross basis. Could you elaborate on what sort of performance you need to see or needs to be achieved for that decision to retain more on that partnership business? And then were there any particular partnerships worth calling out that we would have seen this notable success and contribute to the net growth?

Yes, so it's a really important question, Anthony. Look, I think I said earlier on, there's no sort of ready-made formula, but let me be really simplistic. If it doesn't hit our ROE targets, don't expect us to lean in, right? I think that's very clear. And I know that sounds potentially flippant. But ultimately, that's what we're managing our overall return profile, too. So if we feel like the financial profile is able to sort of get into that space with a degree of confidence, then that's what we aim for. But I think the confidence part of that is also really important because for us, we won't just jump there because someone has told us that. I think for us, we want to get really comfortable with the data flows. We want to get really comfortable with the data. We want to get to know people over time. And so it's very rare that we jump to a sort of let's call it, aggressive net position, perhaps that's their own phraseology, but an aggressive net position too quickly. And we don't feel under any pressure to do that, to be frank, which is also really important. We would only grow and I think Jim said it earlier on, we'll only grow where we believe we feel confident to grow. And it's a function of how the partnerships work and how the data is flowing, how the chemistry between the underwriters, the philosophies working, et cetera, et cetera. And remember that for the majority of our MGA relationships, we actually have profit share arrangements in place. And so there's actually skin in the game for them as well. We think that's a really important part of the overall sort of mix and formula. It's not the only part, but really important part as well. So for us, that's how we think of it. And back to what Jim was alluding to and I was alluding to as well. We brought on a lot of new MGA relationships over the past, let's call it, 18 months or so. We feel really positive that there's a good strong tailwind behind us, but we feel no pressure to do that. And I think in terms of your specific on lines, I think in the first half of this year, we've lent into surety right? With one particular partner just to use that as an example. And actually, for the first -- I probably get this slightly wrong, but for the first sort of year to 2 years of that relationship, we took a very, very small net position. And therefore, it was sort of 2 years of almost getting used to seasoning, et cetera. before we started to lean into the net. So a pretty fulsome answer, but it's the heart of our philosophy, Anthony, and how we approach these. And it's a really important part where I think people need to get confidence in our approach to that distribution channel.

Yes, appreciate all the color there. And then I just -- one other question, bigger picture. We've seen sort of an emerging trend of consolidation of MGAs. And I'm just curious, has this trend had any impact on SiriusPoint's model of partnering with MGAs or any effect to that pipeline of potential partnerships that you've seen?

Nothing. Nothing material, Anthony. No, nothing material.

We have reached the end of our question-and-answer session. I would now like to hand the call back over to Liam Blackledge for any closing comments.

Thank you, everyone, for joining us today. If you have any follow-up questions, we will be around to take your call or you can e-mail us on investor.relations@siriuspt.com. Thank you for your ongoing support, and I hope you enjoy the remainder of the day. I will now turn the call back over to operator.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.