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JuneSeptember 30, 2019
Title of each class | Trading symbol | Name of each exchange on which registered | |||||||
Common shares, par value $0.01 per share | SG | Nasdaq Global Select Market |
SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.
INDEX TO FORM 10-Q
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Consolidated Balance Sheets at | ||||||
Consolidated Statements of Income for the three and | ||||||
Consolidated Statements of Comprehensive Income for the three and | ||||||
Consolidated Statements of Shareholders' Equity for the three and | ||||||
Consolidated Statements of Cash Flows for the | ||||||
Notes to Consolidated Financial Statements | ||||||
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•••••the Company'sSirius Group's operating subsidiaries' ratings with rating agencies;••••••shareholder;•••
(Expressed in millions of U.S. dollars, except share information) Assets Fixed maturity investments, trading, at fair value (Amortized cost 2019: $1,774.2; 2018: $1,952.9) Short-term investments, at fair value (Amortized cost 2019: $881.3; 2018: $716.1) Equity securities, trading, at fair value (Cost 2019: $376.2; 2018: $409.4) Other long-term investments, at fair value (Cost 2019: $349.9; 2018: $337.6) Cash Restricted cash Total investments and cash Accrued investment income Insurance and reinsurance premiums receivable Reinsurance recoverable on unpaid losses Reinsurance recoverable on paid losses Funds held by ceding companies Ceded unearned insurance and reinsurance premiums Deferred acquisition costs Deferred tax asset Accounts receivable on unsettled investment sales Goodwill Intangible assets Other assets Total assets Liabilities Loss and loss adjustment expense reserves Unearned insurance and reinsurance premiums Ceded reinsurance payable Funds held under reinsurance treaties Deferred tax liability Debt Accounts payable on unsettled investment purchases Other liabilities Total liabilities Commitments and contingencies (see Note 18) Mezzanine equity Series B preference shares Common shareholders' equity Common shares (shares issued and outstanding, 2019: 115,296,918; 2018: 115,151,251) Additional paid-in surplus Retained earnings Accumulated other comprehensive (loss) Total common shareholders' equity Non-controlling interests Total equity Total liabilities, mezzanine equity, and equity (Expressed in millions of U.S. dollars, except share and per share information) 2019 2018 2019 2018 Revenues Net earned insurance and reinsurance premiums Net investment income Net realized investment gains Net unrealized investment gains Net foreign exchange (losses) gains Other revenue Total revenues Expenses Loss and loss adjustment expenses Insurance and reinsurance acquisition expenses Other underwriting expenses General and administrative expenses Intangible asset amortization expenses Interest expense on debt Total expenses Pre-tax income Income tax expense Net income Income attributable to non-controlling interests Income attributable to Sirius Group Change in carrying value of Series B preference shares Accrued dividends on Series A redeemable preference shares Net income attributable to Sirius Group's common shareholders Net income per common share and common share equivalent Basic earnings per common share and common share equivalent Diluted earnings per common share and common share equivalent Weighted average number of common shares and common share equivalents outstanding: Basic weighted average number of common shares and common share equivalents outstanding Diluted weighted average number of common shares and common share equivalents outstanding (Expressed in millions of U.S. dollars) 2019 2018 2019 2018 Comprehensive income Net income Other comprehensive income (loss) Change in foreign currency translation, net of tax Total other comprehensive income (loss) Comprehensive income Net (income) attributable to non-controlling interests Comprehensive income attributable to Sirius Group Share-based compensation Capital contribution from former parent Other, net Cumulative effect of an accounting change Net income Income attributable to non-controlling interests Change in carrying value of Series B preference shares Accrued dividends on Series A redeemable preference shares Other, net Accumulated net foreign currency translation (losses) Balance at beginning of period Net change in foreign currency translation Balance at the end of period Easterly held a special meeting of Easterly stockholders on November 2, 2018 to approve the completion of the transactions contemplated by the Merger Agreement. Easterly Acquisition Sponsor, LLC (the "Sponsor") and Easterly's other stockholders approved each of the proposals presented at the special meeting. After the special meeting, but prior to the consummation of the Merger, certain Easterly public stockholders exercised their redemption rights as provided for by Easterly's charter. In total, out of the Trust Account balance of $149.0 million, there were $109.7 million of redemptions by Easterly public stockholders, which decreased the amount of cash in the Trust Account available for general corporate purposes following the Merger. After the redemption of shares held by Easterly's public stockholders, there was $39.3 million in the Trust Account. This resulted in the issuance of 2,280,241 common shares to Easterly public stockholders. million. Common shares redemption agreement Trade Credit 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. For the three months ended June 30, 2019 (Millions) Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Loss and allocated LAE(1) Insurance and reinsurance acquisition expenses Technical profit Unallocated LAE(2) Other underwriting expenses Underwriting income Service fee revenue(3) Managing general underwriter unallocated LAE Managing general underwriter other underwriting expenses General and administrative expenses, MGU + Runoff & Other(4) Underwriting income (loss), including net service fee income Net investment income Net realized investment (losses) gains Net unrealized investment (losses) gains Net foreign exchange gains (losses) Other revenue(5) General and administrative expenses(6) Intangible asset amortization expenses Interest expense on debt Pre-tax income Underwriting Ratios Loss ratio Acquisition expense ratio Other underwriting expense ratio Combined ratio(7) Goodwill and intangible assets(8) (1)Loss and allocated loss adjustment expenses ("LAE") are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income). (1)Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income). (1)Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income). (1)Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income). A&H ($5.8 million). Net investment income for the three months and (1)Includes Net realized investment gains (1)Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor's ("S&P") and 2) Moody's Investors Service ("Moody's"). The following table summarizes investments in hedge funds and private equity interests by investment objective and sector as of Notice Period Redemption Frequency Monthly Quarterly Semi-annual Annual Total Certain of the hedge fund and private equity fund investments in which Sirius Group 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 (Millions) Private Equity Funds – expected lock up period remaining The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. (1)Excludes fair value of (1)Excludes fair value of $301.4 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient. For the three months ended June 30, 2019 (Millions) Balance at March 31, 2019 Total realized and unrealized gains (losses) Foreign currency gains (losses) through Other Comprehensive Income Purchases Sales/Settlements Balance at June 30, 2019 (1)Excludes fair value of For the three months ended June 30, 2018 (Millions) Balance at March 31, 2018 Total realized and unrealized gains (losses) Foreign currency gains (losses) through Other Comprehensive Income Purchases Sales/Settlements Balance at June 30, 2018 (1)Excludes fair value of For the six months ended June 30, 2019 (Millions) Balance at December 31, 2018 Total realized and unrealized gains (losses) Foreign currency gains (losses) through Other Comprehensive Income Purchases Sales/Settlements Balance at June 30, 2019 (1)Excludes fair value of (1)As of (1)As of December 31, 2018, each asset type consists of one security. (1)Fair value estimated by internal pricing and considered a Level 3 measurement. Unamortized issuance costs 2017 SEK Subordinated Notes, carrying value Unamortized discount Unamortized issuance costs 2016 SIG Senior Notes, carrying value (1)Effective rate considers the effect of the debt issuance costs. Standby letter of credit facilities Sirius Group reported an income tax expense (benefit) of Sirius Group records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset 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, Sirius Group 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 Sirius Group's deferred tax assets and tax expense. Equity warrants (Millions) Derivatives not designated as hedging instruments Interest rate cap Foreign currency swaps Foreign currency forwards Weather derivatives Equity futures contracts Equity put options Equity warrants (1)Asset derivatives are classified within Other assets within the Company's Consolidated Balance Sheets at During the nine months ended September 30, 2019, Sirius Group employees forfeited 57,565 performance share units and 71,988 restricted share units. The Series B preference shares rank senior to common shares with respect to dividend rights, rights of liquidation, winding-up, or dissolution of the Company and junior to all of the Company's existing and future policyholder obligations and debt obligations. Without the consent of the holders of the Series B preference shares, the Company may not issue any class or series of shares that rank senior or pari passu with the Series B preference shares as to the payment of dividends or as to distribution of assets upon any voluntary or involuntary liquidation, winding-up or dissolution of the Company, if the aggregate gross proceeds from the issuance of all such senior or pari passu shares equals or exceeds $100 million. Alstead Re (1)For the three months ended (1)Includes Other long-term investments that are not equity method eligible. (1)The ownership percentage of The following table presents total assets of unconsolidated VIEs in which Sirius Group holds a variable interest, as well as the maximum exposure to loss associated with these VIEs: (1)Comprised primarily of hedge funds and private equity funds. and 2018. 2019. Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Net investment income Net realized investment gains Net unrealized investment gains Net foreign exchange (losses) gains Other revenue Total revenues Loss and loss adjustment expenses ("LAE") Insurance and reinsurance acquisition expenses Other underwriting expenses General and administrative expenses Intangible asset amortization expenses Interest expense on debt Total expenses Income tax expense Income attributable to non-controlling interests Change in carrying value of Series B preference shares Accrued dividends on Series A redeemable preference shares Combined ratio(4) (2)The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums. (1) Net earned insurance and reinsurance premiums – Net earned insurance and reinsurance premiums for the three months ended Insurance and reinsurance acquisition expenses – Insurance and reinsurance acquisition expenses increased Other underwriting expenses – Other underwriting expenses decreased A summary of Sirius Group's total pre-tax net investment results and performance metrics for the three and (1)Includes foreign exchange gains (losses) for the three months ended In U.S. dollars In local currencies Bloomberg Barclays US Agg 1-3 Year Total Return Value Unhedged USD OMX Stockholm OMRX Total Bond Index Bloomberg Barclays Pan-European Aggregate: Corp 1-3 Years Total Return In U.S. dollars In local currencies S&P 500 Index (total return) In U.S. dollars In local currencies For the For the . A summary of the impact of foreign currency translation on Sirius Group's consolidated financial results for the three and (Millions) Net realized investment gains - foreign currency(1) Net unrealized investment (losses) gains - foreign currency(2) Net realized and unrealized investment gains - foreign currency Net foreign exchange gains - foreign currency translation gains(3) Net foreign exchange gains - currency swaps(3) Net foreign exchange (losses) - currency forwards(3) Net foreign exchange (losses) - other(3) Income tax benefit (expense) Total foreign currency remeasurement gains recognized through net income, after tax Change in foreign currency translation on investments recognized through other comprehensive income, after tax Change in foreign currency translation on non - investment net liabilities recognized through other comprehensive income, after tax Total foreign currency translation gains (losses) recognized through other comprehensive income, after tax Total foreign currency gains recognized in comprehensive income, after tax (1)Component of Net realized investment gains on the Consolidated Statements of Income Set forth below is the carrying value of our cash and investment holdings in U.S. dollars and foreign currencies as of Technical profit Three months ended unfavorable prior year loss reserve development. Three months ended Technical profit Underwriting income (1)The loss ratio is calculated by dividing the sum of loss and allocated LAE and Unallocated LAE expenses by net earned insurance and reinsurance premiums. Three months ended business mix as increased primary insurance writings for risks originating from the U.S. are recorded at lower net commission ratios. Additionally, net earned insurance and reinsurance premiums increased 28% to $330 million for the nine months ended September 30, 2019 from $258 million for the nine months ended September 30, 2018. Specialty & Casualty (Millions) 2019 2018 2019 2018 Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Loss and allocated LAE Insurance and reinsurance acquisition expenses Technical profit Unallocated LAE Other underwriting expenses Underwriting (loss) income Ratios: Loss ratio(1) Acquisition expense ratio(2) Other underwriting expense ratio(3) Combined ratio(4) Thomas Cook bankruptcy. Catastrophe losses, net of reinsurance and reinstatement premiums, were $1 million (less than 1 point) each for the nine months ended September 30, 2019 and 2018, respectively. Specialty & Casualty (Millions) 2019 2018 2019 2018 Casualty Aviation & Space Trade Credit Marine Environmental Surety Contingency Total Specialty & Casualty Net Earned Insurance and Reinsurance Premiums Specialty & Casualty (Millions) 2019 2018 2019 2018 Casualty Aviation & Space Trade Credit Marine Surety Contingency Environmental Total Runoff & Other (Millions) 2019 2018 2019 2018 Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Loss and allocated LAE Insurance and reinsurance acquisition expenses Technical (loss) profit Unallocated LAE Other underwriting expenses Underwriting (loss) income General and administrative expenses Underwriting (loss) income Three months ended Adjusted tangible book value, and Adjusted tangible book value per share Adjusted tangible book value and Adjusted tangible book value per share are useful to investors because they measure the realizable value of shareholder returns, excluding the impact of goodwill, intangible assets, and net deferred liability on intangible assets. Adjusted book value per share is derived by dividing the Adjusted book value by the Adjusted shares outstanding. Adjusted tangible book value per share is derived by dividing Adjusted tangible book value by the Adjusted shares outstanding. (Expressed in Millions, except share information) As of As of Common shares outstanding Series B preference shares outstanding Earned share-based compensation awards, excluding stock options Earned portion of Stock option awards issued Adjusted shares outstanding Total common shareholders' equity Series B preference shares Earned portion of future proceeds from stock option awards Adjusted book value Book value per common share Adjusted book value per share (Expressed in Millions) 2019 2018 2019 2018 Net income attributable to common shareholders Adjustment for net realized and unrealized gains on investments Adjustment for net foreign exchange gains Adjustment for income tax expense(1) Operating (loss) income attributable to common shareholders (1)Adjustment for income tax expense (benefits) represents the income tax expense (benefits) associated with the adjustment for net realized and unrealized Sirius International has the ability to pay dividends to Sirius Bermuda 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 (the "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. Sirius 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, 2018, Sirius International had $373 million (based on the December 31, 2018 SEK to USD exchange rate) of unrestricted equity on a parent account basis (the lower of the two approaches) available to pay dividends in 2019. The amount of dividends available to be paid by Sirius International in any given year is also subject to cash flow and earnings generated by Sirius International's business, the maintenance of adequate solvency capital ratios for Sirius International and the consolidated Sirius International UK Holdings Ltd. group, as well as dividends received from its subsidiaries, including Sirius America. Earnings generated by Sirius International's business that are allocated to the Safety Reserve are not available to pay dividends (see "Safety Reserve" below). For the America up to and including the termination date. Under local statutory requirements, an amount equal to the deferred tax liability on Sirius International's Safety Reserve The following table illustrates Sirius Group's consolidated insurance float position as of (Millions) Loss and LAE reserves Unearned insurance and reinsurance premiums Ceded reinsurance payable Funds held under reinsurance treaties Deferred tax liability on safety reserve Float liabilities Cash Reinsurance recoverable on paid and unpaid losses Insurance and reinsurance premiums receivable Funds held by ceding companies Deferred acquisition costs Ceded unearned insurance and reinsurance premiums Float assets Insurance float Insurance float as a multiple of total capital(1) Insurance float as a multiple of Sirius Group's common shareholders' equity (1)See calculation of total capital (Millions) 2017 SEK Subordinated Notes 2016 SIG Senior Notes Total debt Series B preference shares Common shareholders' equity Total capital Total debt to total capital Total debt and Series B preference shares to total capital Sirius International has other secured letter of credit and trust arrangements with various financial institutions to support its insurance operations. As of (1)Refer to Consolidated Statements of Cash Flows included in Sirius Group's Unaudited Consolidated Financial Statements included in "Part I, Item 1. Financial Statements." In addition, as a result of these heightened risks and uncertainties, Sirius Group may be unable to enter into new relationships or preserve its existing relationships with third parties that are critical to maintaining its business. Clients and other business partners may seek to engage with other insurance and reinsurance companies that are not experiencing the same degree of uncertainty asJuneSeptember 30, 2019 and December 31, 2018 June 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Unaudited Unaudited $ 1,815.7 $ 1,949.2 882.9 715.5 387.8 380.0 379.9 365.0 $ 1,771.4 $ 1,949.2 989.3 715.5 384.3 380.0 368.4 365.0 116.8 119.4 145.8 119.4 13.7 12.8 14.0 12.8 3,596.8 3,541.9 3,673.2 3,541.9 13.3 14.1 11.5 14.1 861.3 630.6 842.6 630.6 357.4 350.2 392.9 350.2 69.8 55.0 55.2 55.0 237.6 186.8 236.8 186.8 188.1 159.8 173.8 159.8 158.8 141.6 155.2 141.6 174.4 202.5 162.8 202.5 2.0 5.0 12.9 5.0 400.6 400.6 400.4 400.6 187.7 195.6 183.8 195.6 171.4 124.0 164.0 124.0 $ 6,419.2 $ 6,007.7 $ 6,465.1 $ 6,007.7 $ 2,023.3 $ 2,016.7 $ 2,186.4 $ 2,016.7 879.5 647.2 807.7 647.2 256.9 206.9 250.4 206.9 126.6 110.6 135.9 110.6 229.7 237.4 208.6 237.4 685.9 696.8 670.3 696.8 2.6 3.2 34.7 3.2 186.3 150.5 189.1 150.5 4,390.8 4,069.3 4,483.1 4,069.3 241.3 232.2 236.0 232.2 1.2 1.2 1.2 1.2 1,093.5 1,089.1 1,097.0 1,089.1 918.5 816.6 915.8 816.6 (229.1 ) (202.4 ) (271.4 ) (202.4 ) 1,784.1 1,704.5 1,742.6 1,704.5 3.0 1.7 3.4 1.7 1,787.1 1,706.2 1,746.0 1,706.2 $ 6,419.2 $ 6,007.7 $ 6,465.1 $ 6,007.7 sixnine months ended JuneSeptember 30, 2019 and 2018 Three months ended June 30, Six months ended June 30, Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 $ 370.7 $ 308.9 $ 682.6 $ 593.4 $ 374.2 $ 321.1 $ 1,056.8 $ 914.5 24.4 19.2 44.5 30.0 22.8 21.8 67.3 51.8 15.6 7.8 24.6 4.1 15.3 3.9 39.9 8.0 15.5 24.7 89.5 40.7 (0.6 ) 25.6 4.5 22.1 Net unrealized investment gains (losses) 53.9 (11.7 ) 143.4 29.0 Net foreign exchange gains (losses) 4.9 (0.4 ) 9.4 21.7 15.4 55.6 35.0 79.0 16.3 17.0 51.3 96.0 441.0 441.8 880.7 769.3 487.4 351.7 1,368.1 1,121.0 278.0 151.4 461.9 292.4 348.6 260.4 810.5 552.8 77.0 66.8 140.3 129.8 75.1 59.2 215.4 189.0 35.5 38.2 70.8 81.4 35.4 35.7 106.2 117.1 28.2 24.2 52.6 38.5 28.0 19.5 80.6 58.0 4.0 4.0 7.9 7.9 3.9 3.9 11.8 11.8 8.0 7.8 15.6 15.5 7.7 7.6 23.3 23.1 430.7 292.4 749.1 565.5 498.7 386.3 1,247.8 951.8 10.3 149.4 131.6 203.8 (2.1 ) (51.2 ) (19.3 ) (62.3 ) 8.2 98.2 112.3 141.5 Pre-tax (loss) income (11.3 ) (34.6 ) 120.3 169.2 Income tax benefit (expense) 3.7 6.9 (15.6 ) (55.4 ) Net income (loss) (7.6 ) (27.7 ) 104.7 113.8 (0.8 ) (0.4 ) (1.2 ) (0.6 ) (0.4 ) (0.3 ) (1.6 ) (0.9 ) 7.4 97.8 111.1 140.9 (Loss) income attributable to Sirius Group (8.0 ) (28.0 ) 103.1 112.9 (0.8 ) - (9.2 ) - 5.3 — (3.9 ) — - - - (2.6 ) — — — (2.6 ) $ 6.6 $ 97.8 $ 101.9 $ 138.3
Net (loss) income attributable to Sirius Group's common shareholders $ (2.7 ) $ (28.0 ) $ 99.2 $ 110.3 Net (loss) income per common share and common share equivalent $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.02 ) $ (0.23 ) $ 0.78 $ 0.88 $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.06 ) $ (0.23 ) $ 0.78 $ 0.88 115,243,685 120,000,000 115,212,772 120,000,000 115,251,853 120,000,000 115,225,942 120,000,000 115,796,367 120,000,000 127,542,402 120,000,000 127,153,523 120,000,000 115,619,222 120,000,000 sixnine months ended JuneSeptember 30, 2019 and 2018 Three months ended
June 30, Six months ended
June 30, $ 8.2 $ 98.2 $ 112.3 $ 141.5 1.1 (48.5 ) (26.7 ) (61.9 ) 1.1 (48.5 ) (26.7 ) (61.9 ) 9.3 49.7 85.6 79.6 (0.8 ) (0.4 ) (1.2 ) (0.6 ) $ 8.5 $ 49.3 $ 84.4 $ 79.0 Three months ended September 30, Nine months ended September 30, (Expressed in millions of U.S. dollars) 2019 2018 2019 2018 Comprehensive (loss) income Net (loss) income $ (7.6 ) $ (27.7 ) $ 104.7 $ 113.8 Other comprehensive (loss) income Change in foreign currency translation, net of tax (42.3 ) 4.7 (69.0 ) (57.2 ) Total other comprehensive (loss) income (42.3 ) 4.7 (69.0 ) (57.2 ) Comprehensive (loss) income (49.9 ) (23.0 ) 35.7 56.6 Net (income) attributable to non-controlling interests (0.4 ) (0.3 ) (1.6 ) (0.9 ) Comprehensive (loss) income attributable to Sirius Group $ (50.3 ) $ (23.3 ) $ 34.1 $ 55.7 sixthree months and nine months ended JuneSeptember 30, 2019 and 2018 Three months ended
June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, (Expressed in millions of U.S. dollars) 2019 2018 2019 2018 2019 2018 2019 2018 Common shares Balance at beginning and end of period $ 1.2 $ 1.2 $ 1.2 $ 1.2 $ 1.2 $ 1.2 $ 1.2 $ 1.2 Additional paid-in surplus Balance at beginning of period 1,090.2 1,197.9 1,089.1 1,197.9 1,093.5 1,199.3 1,089.1 1,197.9 3.3 - 4.5 - 3.4 — 7.9 — - 1.4 - 1.4 — — — 1.4 - - (0.1 ) - 0.1 — — — Balance at end of period 1,093.5 �� 1,199.3 1,093.5 1,199.3 1,097.0 1,199.3 1,097.0 1,199.3 Retained earnings Balance at beginning of period 911.8 900.4 816.6 858.4 918.5 998.2 816.6 858.4 - - - 1.6 — — — 1.6 Balance at beginning of period, as adjusted 911.8 900.4 816.6 860.0 918.5 998.2 816.6 860.0 8.2 98.2 112.3 141.5 Net (loss) income (7.6 ) (27.7 ) 104.7 113.8 (0.8 ) (0.4 ) (1.2 ) (0.6 ) (0.4 ) (0.3 ) (1.6 ) (0.9 ) (0.8 ) - (9.2 ) - 5.3 — (3.9 ) — - - - (2.6 ) — — — (2.6 ) 0.1 - - (0.1 ) — — — (0.1 ) Balance at end of period 918.5 998.2 918.5 998.2 915.8 970.2 915.8 970.2 Accumulated other comprehensive (loss) Balance at beginning of period (230.2 ) (153.9 ) (202.4 ) (140.5 ) (229.1 ) (202.4 ) (202.4 ) (140.5 ) (230.2 ) (153.9 ) (202.4 ) (140.5 ) (229.1 ) (202.4 ) (202.4 ) (140.5 ) 1.1 (48.5 ) (26.7 ) (61.9 ) (42.3 ) 4.7 (69.0 ) (57.2 ) (229.1 ) (202.4 ) (229.1 ) (202.4 ) (271.4 ) (197.7 ) (271.4 ) (197.7 ) Balance at the end of period (229.1 ) (202.4 ) (229.1 ) (202.4 ) (271.4 ) (197.7 ) (271.4 ) (197.7 ) Total common shareholders' equity $ 1,784.1 $ 1,996.3 $ 1,784.1 $ 1,996.3 $ 1,742.6 $ 1,973.0 $ 1,742.6 $ 1,973.0 Non-controlling interests 3.0 1.0 3.0 1.0 3.4 1.1 3.4 1.1 Total equity $ 1,787.1 $ 1,997.3 $ 1,787.1 $ 1,997.3 $ 1,746.0 $ 1,974.1 $ 1,746.0 $ 1,974.1 sixnine months ended JuneSeptember 30, 2019 and 2018 Six months ended June 30, Nine months ended September 30, (Expressed in millions of U.S. dollars) 2019 2018 2019 2018 Cash flows from operations: Net income $ 112.3 $ 141.5 $ 104.7 $ 113.8 Adjustments to reconcile net income to net cash provided from operations: Net realized and unrealized investment (gains) (114.1 ) (44.7 ) (183.3 ) (37.0 ) Amortization of premium on fixed maturity investments (3.2 ) 5.6 (4.7 ) 5.9 Amortization of intangible assets 7.9 7.9 11.8 11.8 Depreciation and other amortization 4.3 4.8 6.3 7.1 Share-based compensation 4.5 - 7.9 — Other operating items: Net change in loss and loss adjustment expense reserves 46.6 18.6 274.1 76.1 Net change in reinsurance recoverable on paid and unpaid losses (36.0 ) (69.1 ) (82.0 ) (69.7 ) Net change in funds held by ceding companies (54.7 ) (18.9 ) (61.5 ) (40.9 ) Net change in unearned insurance and reinsurance premiums 252.6 348.1 212.4 311.8 Net change in ceded reinsurance payable 50.4 141.1 73.3 113.0 Net change in ceded unearned insurance and reinsurance premiums (35.8 ) (123.4 ) (32.4 ) (106.3 ) Net change in insurance and reinsurance premiums receivable (252.0 ) (320.0 ) (269.4 ) (271.9 ) Net change in deferred acquisition costs (20.2 ) (38.2 ) (22.5 ) (39.2 ) Net change in funds held under reinsurance treaties 18.4 4.7 33.1 37.1 Net change in current and deferred income taxes, net 4.2 50.5 (4.8 ) 38.6 Net change in other assets and liabilities, net 29.8 (73.5 ) 24.9 (42.9 ) Net cash provided from operations 15.0 35.0 87.9 107.3 Cash flows from investing activities: Net change in short-term investments (160.2 ) (218.6 ) (285.8 ) (157.6 ) Sales of fixed maturities and convertible fixed maturity investments 241.9 945.0 430.7 1,149.9 Maturities, calls, and paydowns of fixed maturity and convertible fixed maturity investments 154.7 58.0 239.4 69.0 Sales of common equity securities 152.2 189.0 212.6 247.9 Distributions and redemptions of other long-term investments 33.6 60.2 Distributions, redemptions, and maturities of other long-term investments 53.6 62.1 Contributions to other long-term investments (41.3 ) (94.8 ) (46.5 ) (131.3 ) Purchases of common equity securities (125.8 ) (317.3 ) (174.9 ) (392.4 ) Purchases of fixed maturities and convertible fixed maturity investments (270.9 ) (753.2 ) (504.4 ) (1,062.9 ) Purchases of consolidated subsidiaries, net of cash acquired — (7.9 ) Net change in unsettled investment purchases and sales 2.4 6.7 23.7 18.6 Other, net 0.6 (1.7 ) 0.8 (3.4 ) Net cash (used for) investing activities (12.8 ) (126.7 ) (50.8 ) (208.0 ) Cash flows from financing activities: Change in collateral held on Interest Rate Cap (0.1 ) - (0.1 ) — Capital contribution from former parent - 1.4 — 1.4 Net cash (used for) provided from financing activities (0.1 ) 1.4 (0.1 ) 1.4 Effect of exchange rate changes on cash (3.8 ) (10.3 ) (9.4 ) (9.8 ) Net (decrease) in cash during period (1.7 ) (100.6 ) 27.6 (109.1 ) Cash and restricted cash balance at beginning of period 132.2 230.6 132.2 230.6 Cash and restricted cash balance at end of period $ 130.5 $ 130.0 $ 159.8 $ 121.5 UnauditedJuneSeptember 30, 2019, have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial information. The accompanying Unaudited Consolidated Financial Statements present the consolidated results of operations, financial condition, and cash flows of the Company and its subsidiaries and those entities in which the Company has control and a majority economic interest as well as those variable interest entities ("VIEs") that meet the requirements for consolidation. All intercompany transactions have been eliminated in consolidation.2016-02,2016-2, Leases (Accounting Standards Codification ("ASC") 842) which requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under previous guidance, recognition of lease assets and liabilities was not required for operating leases. The new guidance requires that lease assets and liabilities to be recognized and measured initially based on the present value of the lease payments. Sirius Group adopted the new guidance using the simplified transition option that allows companies to apply the new lease standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Sirius Group also made the following elections:•••Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited••2017-08,2017-8, Premium Amortization on Purchased Callable Debt Securities (ASC 310-20), which changes the amortization period for certain purchased callable debt securities. Under the new guidance, for investments in callable debt securities held at a premium, the premium will be amortized over the period to the earliest call date. The new guidance does not change the amortization period for callable debt securities held at a discount. The adoption of this guidance did not have a significant effect on our financial statements.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited••••millionSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedUnauditedJuneSeptember 30, 2019 and 2018: Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total For the three months ended September 30, 2019 (Expressed in millions of U.S. dollars) Total $ 236.2 $ 152.8 $ 96.9 $ 1.2 $ - $ 487.1 $ 153.6 $ 137.4 $ 120.6 $ 2.1 $ — $ 413.7 $ 191.6 $ 120.6 $ 89.2 $ 0.3 $ - $ 401.7 $ 103.7 $ 104.6 $ 113.2 $ 0.8 $ — $ 322.3 $ 164.3 $ 118.8 $ 87.3 $ 0.3 $ - $ 370.7 $ 159.9 $ 115.1 $ 98.7 $ 0.5 $ — $ 374.2 (131.3 ) (71.8 ) (61.3 ) (2.4 ) - (266.8 ) (184.4 ) (63.6 ) (85.5 ) (0.9 ) — (334.4 ) (27.2 ) (36.0 ) (24.6 ) (1.8 ) 12.6 (77.0 ) (29.2 ) (32.5 ) (27.1 ) (0.1 ) 13.8 (75.1 ) 5.8 11.0 1.4 (3.9 ) 12.6 26.9 (53.7 ) 19.0 (13.9 ) (0.5 ) 13.8 (35.3 ) (2.6 ) (2.0 ) (2.2 ) (0.2 ) (4.2 ) (11.2 ) (5.5 ) (2.0 ) (3.0 ) (0.2 ) (3.5 ) (14.2 ) (17.0 ) (5.9 ) (6.7 ) (1.1 ) (4.8 ) (35.5 ) (14.7 ) (6.8 ) (8.8 ) (1.4 ) (3.7 ) (35.4 ) (13.8 ) 3.1 (7.5 ) (5.2 ) 3.6 (19.8 ) (73.9 ) 10.2 (25.7 ) (2.1 ) 6.6 (84.9 ) - 30.3 - - (13.7 ) 16.6 — 31.0 — — (14.6 ) 16.4 - (5.3 ) - - 5.3 - — (4.3 ) — — 4.3 — - (4.8 ) - - 4.8 - — (3.7 ) — — 3.7 — - (15.0 ) - (1.0 ) - (16.0 ) — (15.1 ) — (1.2 ) — (16.3 ) $ (13.8 ) $ 8.3 $ (7.5 ) $ (6.2 ) $ - $ (19.2 ) (73.9 ) 18.1 (25.7 ) (3.3 ) — (84.8 ) 24.4 22.8 15.6 15.3 15.5 53.9 (0.6 ) 4.9 (1.2 ) (0.1 ) (12.2 ) (11.7 ) (4.0 ) (3.9 ) (8.0 ) (7.7 ) $ 10.3 $ (11.3 ) 81.5 % 62.1 % 72.7 % NM NM 75.0 % 118.8 % 57.0 % 89.7 % NM NM 93.2 % 16.6 % 30.3 % 28.2 % NM NM 20.8 % 18.3 % 28.2 % 27.5 % NM NM 20.1 % 10.3 % 5.0 % 7.7 % NM NM 9.6 % 9.2 % 5.9 % 8.9 % NM NM 9.5 % 108.4 % 97.4 % 108.6 % NM NM 105.4 % 146.3 % 91.1 % 126.1 % NM NM 122.8 % $ - $ 580.2 $ - $ 8.1 $ - $ 588.3 $ — $ 576.1 $ — $ 8.1 $ — $ 584.2 Note 9) and gains (losses) from derivatives (seeNote 11) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).Unaudited For the three months ended June 30, 2018 (Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total For the three months ended September 30, 2018 (Expressed in millions of U.S. dollars) Total Gross written premiums $ 325.4 $ 112.3 $ 60.9 $ 6.4 $ - $ 505.0 $ 203.7 $ 117.1 $ 76.5 $ 0.7 $ — $ 398.0 Net written premiums $ 177.0 $ 82.8 $ 55.1 $ 5.4 $ - $ 320.3 $ 144.9 $ 87.9 $ 72.6 $ 0.3 $ — $ 305.7 Net earned insurance and reinsurance premiums $ 167.5 $ 80.8 $ 55.5 $ 5.1 $ - $ 308.9 $ 172.7 $ 89.6 $ 58.4 $ 0.4 $ — $ 321.1 Loss and allocated LAE(1) (68.2 ) (40.9 ) (31.7 ) (0.3 ) - (141.1 ) (173.2 ) (51.3 ) (34.1 ) 10.2 — (248.4 ) Insurance and reinsurance acquisition expenses (34.1 ) (26.4 ) (14.6 ) (1.5 ) 9.8 (66.8 ) (30.1 ) (26.7 ) (16.2 ) (0.1 ) 13.9 (59.2 ) Technical profit 65.2 13.5 9.2 3.3 9.8 101.0 (30.6 ) 11.6 8.1 10.5 13.9 13.5 Unallocated LAE(2) (2.5 ) (1.0 ) (1.7 ) - (5.1 ) (10.3 ) (3.3 ) (1.7 ) (1.6 ) (0.7 ) (4.7 ) (12.0 ) Other underwriting expenses (18.1 ) (6.3 ) (7.9 ) (2.4 ) (3.5 ) (38.2 ) (17.5 ) (6.4 ) (8.4 ) (1.4 ) (2.0 ) (35.7 ) Underwriting income 44.6 6.2 (0.4 ) 0.9 1.2 52.5 (51.4 ) 3.5 (1.9 ) 8.4 7.2 (34.2 ) Service fee revenue(3) - 27.4 - - (9.8 ) 17.6 — 29.3 — — (13.9 ) 15.4 Managing general underwriter unallocated LAE - (5.1 ) - - 5.1 - — (4.7 ) — — 4.7 — Managing general underwriter other underwriting expenses - (3.5 ) - - 3.5 - — (2.0 ) — — 2.0 — General and administrative expenses, MGU + Runoff & Other(4) - (14.2 ) - (1.0 ) - (15.2 ) — (13.8 ) — (0.8 ) — (14.6 ) Underwriting income (loss), including net service fee income 44.6 10.8 (0.4 ) (0.1 ) - 54.9 (51.4 ) 12.3 (1.9 ) 7.6 — (33.4 ) Net investment income 19.2 21.8 Net realized investment (losses) gains 7.8 3.9 Net unrealized investment (losses) gains 24.7 (11.7 ) Net foreign exchange gains (losses) 25.6 (0.4 ) Other revenue(5) 38.0 1.6 General and administrative expenses(6) (9.0 ) (4.9 ) Intangible asset amortization expenses (4.0 ) (3.9 ) Interest expense on debt (7.8 ) (7.6 ) Pre-tax income $ 149.4 $ (34.6 ) Underwriting Ratios Loss ratio 42.2 % 51.9 % 60.2 % NM NM 49.0 % 102.2 % 59.2 % 61.1 % NM NM 81.1 % Acquisition expense ratio 20.4 % 32.7 % 26.3 % NM NM 21.6 % 17.4 % 29.8 % 27.7 % NM NM 18.4 % Other underwriting expense ratio 10.8 % 7.8 % 14.2 % NM NM 12.4 % 10.1 % 7.1 % 14.4 % NM NM 11.1 % Combined ratio(7) 73.4 % 92.4 % 100.7 % NM NM 83.0 % 129.7 % 96.1 % 103.2 % NM NM 110.6 % Goodwill and intangible assets(8) $ - $ 604.2 $ - $ 5.0 $ - $ 609.2 $ — $ 600.1 $ — $ 8.1 $ — $ 608.2 the right of indemnification (seeNote 10), gains (losses) from derivatives (seeNote 11), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).Unauditedsixnine months ended JuneSeptember 30, 2019 and 2018: For the six months ended June 30, 2019 (Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total For the nine months ended September 30, 2019 (Expressed in millions of U.S. dollars) Total Gross written premiums $ 566.9 $ 322.1 $ 217.8 $ 2.6 $ - $ 1,109.4 $ 720.5 $ 459.5 $ 338.4 $ 4.7 $ — $ 1,523.1 Net written premiums $ 432.9 $ 255.5 $ 197.4 $ 0.7 $ - $ 886.5 $ 536.6 $ 360.1 $ 310.6 $ 1.5 $ — $ 1,208.8 Net earned insurance and reinsurance premiums $ 304.0 $ 214.9 $ 163.0 $ 0.7 $ - $ 682.6 $ 463.9 $ 330.0 $ 261.7 $ 1.2 $ — $ 1,056.8 Loss and allocated LAE(1) (193.9 ) (135.0 ) (108.9 ) (3.5 ) - (441.3 ) (378.3 ) (198.6 ) (194.4 ) (4.4 ) — (775.7 ) Insurance and reinsurance acquisition expenses (53.0 ) (62.6 ) (45.1 ) (2.5 ) 22.9 (140.3 ) (82.2 ) (95.1 ) (72.2 ) (2.6 ) 36.7 (215.4 ) Technical profit 57.1 17.3 9.0 (5.3 ) 22.9 101.0 3.4 36.3 (4.9 ) (5.8 ) 36.7 65.7 Unallocated LAE(2) (4.7 ) (3.5 ) (4.1 ) (0.7 ) (7.6 ) (20.6 ) (10.2 ) (5.5 ) (7.1 ) (0.9 ) (11.1 ) (34.8 ) Other underwriting expenses (33.2 ) (12.0 ) (14.9 ) (3.2 ) (7.5 ) (70.8 ) (47.9 ) (18.8 ) (23.7 ) (4.6 ) (11.2 ) (106.2 ) Underwriting income (loss) 19.2 1.8 (10.0 ) (9.2 ) 7.8 9.6 (54.7 ) 12.0 (35.7 ) (11.3 ) 14.4 (75.3 ) Service fee revenue(3) - 66.6 - - (24.7 ) 41.9 — 97.6 — — (39.3 ) 58.3 Managing general underwriter unallocated LAE - (9.4 ) - - 9.4 - — (13.7 ) — — 13.7 — Managing general underwriter other underwriting expenses - (7.5 ) - - 7.5 - — (11.2 ) — — 11.2 — General and administrative expenses, MGU + Runoff & Other(4) - (31.2 ) - (1.8 ) - (33.0 ) — (46.3 ) — (3.0 ) — (49.3 ) Underwriting income (loss), including net service fee income $ 19.2 $ 20.3 $ (10.0 ) $ (11.0 ) $ - $ 18.5 (54.7 ) 38.4 (35.7 ) (14.3 ) — (66.3 ) Net investment income 44.5 67.3 Net realized investment (losses) gains 24.6 39.9 Net unrealized investment (losses) gains 89.5 143.4 Net foreign exchange gains (losses) 4.5 9.4 Other revenue(5) (6.9 ) (7.0 ) General and administrative expenses(6) (19.6 ) (31.3 ) Intangible asset amortization expenses (7.9 ) (11.8 ) Interest expense on debt (15.6 ) (23.3 ) Pre-tax income $ 131.6 $ 120.3 Underwriting Ratios Loss ratio 65.3 % 64.4 % 69.3 % NM NM 67.7 % 83.7 % 61.8 % 77.0 % NM NM 76.7 % Acquisition expense ratio 17.4 % 29.1 % 27.7 % NM NM 20.6 % 17.7 % 28.8 % 27.6 % NM NM 20.4 % Other underwriting expense ratio 10.9 % 5.6 % 9.1 % NM NM 10.4 % 10.3 % 5.7 % 9.1 % NM NM 10.0 % Combined ratio(7) 93.6 % 99.1 % 106.1 % NM NM 98.7 % 111.7 % 96.3 % 113.7 % NM NM 107.1 % Goodwill and intangible assets(8) $ - $ 580.2 $ - $ 8.1 $ - $ 588.3 $ — $ 576.1 $ — $ 8.1 $ — $ 584.2 Note 9) and gains (losses) from derivatives (seeNote 11) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).Unaudited For the six months ended June 30, 2018 (Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total For the nine months ended September 30, 2018 (Expressed in millions of U.S. dollars) Total Gross written premiums $ 672.0 $ 257.9 $ 176.4 $ 13.9 $ - $ 1,120.2 $ 875.7 $ 375.0 $ 252.9 $ 14.6 $ — $ 1,518.2 Net written premiums $ 424.2 $ 198.3 $ 155.7 $ 11.5 $ - $ 789.7 $ 569.1 $ 286.2 $ 228.3 $ 11.8 $ — $ 1,095.4 Net earned insurance and reinsurance premiums $ 303.6 $ 168.8 $ 109.9 $ 11.1 $ - $ 593.4 $ 476.3 $ 258.4 $ 168.3 $ 11.5 $ — $ 914.5 Loss and allocated LAE(1) (138.6 ) (86.7 ) (53.3 ) 2.1 - (276.5 ) (311.8 ) (138.0 ) (87.4 ) 12.3 — (524.9 ) Insurance and reinsurance acquisition expenses (63.4 ) (55.6 ) (28.7 ) (2.2 ) 20.1 (129.8 ) (93.5 ) (82.3 ) (44.9 ) (2.3 ) 34.0 (189.0 ) Technical profit 101.6 26.5 27.9 11.0 20.1 187.1 71.0 38.1 36.0 21.5 34.0 200.6 Unallocated LAE(2) (4.4 ) (2.6 ) (2.9 ) (0.9 ) (5.1 ) (15.9 ) (7.7 ) (4.3 ) (4.5 ) (1.6 ) (9.8 ) (27.9 ) Other underwriting expenses (35.5 ) (14.3 ) (15.9 ) (3.8 ) (11.9 ) (81.4 ) (53.0 ) (20.7 ) (24.3 ) (5.2 ) (13.9 ) (117.1 ) Underwriting income 61.7 9.6 9.1 6.3 3.1 89.8 10.3 13.1 7.2 14.7 10.3 55.6 Service fee revenue(3) - 60.2 - - (20.1 ) 40.1 — 89.5 — — (34.0 ) 55.5 Managing general underwriter unallocated LAE - (5.1 ) - - 5.1 - — (9.8 ) — — 9.8 — Managing general underwriter other underwriting expenses - (11.9 ) - - 11.9 - — (13.9 ) — — 13.9 — General and administrative expenses, MGU + Runoff & Other(4) - (23.7 ) - (2.1 ) - (25.8 ) — (37.5 ) — (2.9 ) — (40.4 ) Underwriting income (loss), including net service fee income 61.7 29.1 9.1 4.2 - 104.1 10.3 41.4 7.2 11.8 — 70.7 Net investment income 30.0 51.8 Net realized investment (losses) gains 4.1 8.0 Net unrealized investment (losses) gains 40.7 29.0 Net foreign exchange gains (losses) 22.1 21.7 Other revenue(5) 38.9 40.5 General and administrative expenses(6) (12.7 ) (17.6 ) Intangible asset amortization expenses (7.9 ) (11.8 ) Interest expense on debt (15.5 ) (23.1 ) Pre-tax income $ 203.8 $ 169.2 Underwriting Ratios Loss ratio 47.1 % 52.9 % 51.1 % NM NM 49.3 % 67.1 % 55.1 % 54.6 % NM NM 60.4 % Acquisition expense ratio 20.9 % 32.9 % 26.1 % NM NM 21.9 % 19.6 % 31.8 % 26.7 % NM NM 20.7 % Other underwriting expense ratio 11.7 % 8.5 % 14.5 % NM NM 13.7 % 11.1 % 8.0 % 14.4 % NM NM 12.8 % Combined ratio(7) 79.7 % 94.3 % 91.7 % NM NM 84.9 % 97.8 % 94.9 % 95.7 % NM NM 93.9 % Goodwill and intangible assets(8) $ - $ 604.2 $ - $ 5.0 $ - $ 609.2 $ — $ 600.1 $ — $ 8.1 $ — $ 608.2 gains (losses) from derivatives (seeNote 11), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).UnauditedJuneSeptember 30, 2019 and 2018: For the three months ended June 30, 2019
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 103.2 $ 102.5 $ 63.5 $ 0.3 $ 269.5 Europe 15.1 5.0 13.4 - 33.5 Canada, the Caribbean, Bermuda and Latin America 14.6 2.0 2.2 - 18.8 Asia and Other 58.7 11.1 10.1 - 79.9 Total net written premium by client location for the three months ended June 30, 2019 $ 191.6 $ 120.6 $ 89.2 $ 0.3 $ 401.7 Net written premiums by underwriting location: United States $ 4.4 $ 58.7 $ 12.7 $ 0.3 $ 76.1 Europe 70.1 58.4 34.5 - 163.0 Canada, the Caribbean, Bermuda and Latin America 99.0 3.3 41.7 - 144.0 Asia and Other 18.1 0.2 0.3 - 18.6 Total written premiums by underwriting location for the three months ended June 30, 2019 $ 191.6 $ 120.6 $ 89.2 $ 0.3 $ 401.7 For the three months ended September 30, 2019 (Expressed in millions of U.S. dollars) Total Net written premiums by client location: United States $ 44.0 $ 87.6 $ 83.1 $ 0.7 $ 215.4 Europe 14.6 5.8 15.1 (0.1 ) 35.4 Canada, the Caribbean, Bermuda and Latin America 19.7 3.7 4.8 0.1 28.3 Asia and Other 25.4 7.5 10.2 0.1 43.2 Total net written premium by client location for the three months ended September 30, 2019 $ 103.7 $ 104.6 $ 113.2 $ 0.8 $ 322.3 Net written premiums by underwriting location: United States $ 7.5 $ 36.9 $ 12.7 $ 0.7 $ 57.8 Europe 45.0 68.1 51.2 — 164.3 Canada, the Caribbean, Bermuda and Latin America 42.3 (0.6 ) 49.0 — 90.7 Asia and Other 8.9 0.2 0.3 0.1 9.5 Total written premiums by underwriting location for the three months ended September 30, 2019 $ 103.7 $ 104.6 $ 113.2 $ 0.8 $ 322.3 For the three months ended June 30, 2018
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 91.6 $ 70.6 $ 37.0 $ 5.4 $ 204.6 Europe 19.3 6.1 9.9 - 35.3 Canada, the Caribbean, Bermuda and Latin America 21.8 1.2 2.0 - 25.0 Asia and Other 44.3 4.9 6.2 - 55.4 Total net written premium by client location for the three months ended June 30, 2018 $ 177.0 $ 82.8 $ 55.1 $ 5.4 $ 320.3 Net written premiums by underwriting location: United States $ 10.9 $ 32.3 $ 3.6 $ 5.4 $ 52.2 Europe 73.7 43.2 24.7 - 141.6 Canada, the Caribbean, Bermuda and Latin America 80.4 7.1 26.3 - 113.8 Asia and Other 12.0 0.2 0.5 - 12.7 Total written premiums by underwriting location for the three months ended June 30, 2018 $ 177.0 $ 82.8 $ 55.1 $ 5.4 $ 320.3 For the three months ended September 30, 2018 (Expressed in millions of U.S. dollars) Total Net written premiums by client location: United States $ 62.4 $ 71.4 $ 45.3 $ (0.1 ) $ 179.0 Europe 22.8 7.4 15.8 0.1 46.1 Canada, the Caribbean, Bermuda and Latin America 24.7 2.6 2.8 — 30.1 Asia and Other 35.0 6.5 8.7 0.3 50.5 Total net written premium by client location for the three months ended September 30, 2018 $ 144.9 $ 87.9 $ 72.6 $ 0.3 $ 305.7 Net written premiums by underwriting location: United States $ 12.6 $ 27.7 $ 5.8 $ — $ 46.1 Europe 61.3 52.7 36.1 — 150.1 Canada, the Caribbean, Bermuda and Latin America 53.8 7.3 30.5 — 91.6 Asia and Other 17.2 0.2 0.2 0.3 17.9 Total written premiums by underwriting location for the three months ended September 30, 2018 $ 144.9 $ 87.9 $ 72.6 $ 0.3 $ 305.7 Unauditedsixnine months ended JuneSeptember 30, 2019 and 2018: For the six months ended June 30, 2019
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 165.2 $ 213.6 $ 131.8 $ 0.3 $ 510.9 Europe 139.7 13.1 38.3 0.2 191.3 Canada, the Caribbean, Bermuda and Latin America 39.1 7.0 6.6 - 52.7 Asia and Other 88.9 21.8 20.7 0.2 131.6 Total net written premium by client location for the six months ended June 30, 2019 $ 432.9 $ 255.5 $ 197.4 $ 0.7 $ 886.5 Net written premiums by underwriting location: United States $ 12.5 $ 99.1 $ 25.1 $ 0.3 $ 137.0 Europe 224.7 122.0 89.1 0.2 436.0 Canada, the Caribbean, Bermuda and Latin America 161.3 34.0 81.8 - 277.1 Asia and Other 34.4 0.4 1.4 0.2 36.4 Total written premiums by underwriting location for the six months ended June 30, 2019 $ 432.9 $ 255.5 $ 197.4 $ 0.7 $ 886.5 For the nine months ended September 30, 2019 (Expressed in millions of U.S. dollars) Total Net written premiums by client location: United States $ 209.2 $ 301.2 $ 214.9 $ 1.0 $ 726.3 Europe 154.3 18.9 53.4 0.1 226.7 Canada, the Caribbean, Bermuda and Latin America 58.8 10.7 11.4 0.1 81.0 Asia and Other 114.3 29.3 30.9 0.3 174.8 Total net written premium by client location for the nine months ended September 30, 2019 $ 536.6 $ 360.1 $ 310.6 $ 1.5 $ 1,208.8 Net written premiums by underwriting location: United States $ 20.0 $ 136.0 $ 37.8 $ 1.0 $ 194.8 Europe 269.7 190.1 140.3 0.2 600.3 Canada, the Caribbean, Bermuda and Latin America 203.6 33.4 130.8 — 367.8 Asia and Other 43.3 0.6 1.7 0.3 45.9 Total written premiums by underwriting location for the nine months ended September 30, 2019 $ 536.6 $ 360.1 $ 310.6 $ 1.5 $ 1,208.8 For the six months ended June 30, 2018
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 178.6 $ 158.1 $ 74.3 $ 11.5 $ 422.5 Europe 125.6 17.7 60.2 - 203.5 Canada, the Caribbean, Bermuda and Latin America 45.0 6.0 4.6 - 55.6 Asia and Other 75.0 16.5 16.6 - 108.1 Total net written premium by client location for the six months ended June 30, 2018 $ 424.2 $ 198.3 $ 155.7 $ 11.5 $ 789.7 Net written premiums by underwriting location: United States $ 16.2 $ 53.3 $ 3.5 $ 11.5 $ 84.5 Europe 210.2 111.8 96.7 - 418.7 Canada, the Caribbean, Bermuda and Latin America 170.2 32.8 53.8 - 256.8 Asia and Other 27.6 0.4 1.7 - 29.7 Total written premiums by underwriting location for the six months ended June 30, 2018 $ 424.2 $ 198.3 $ 155.7 $ 11.5 $ 789.7 For the nine months ended September 30, 2018 (Expressed in millions of U.S. dollars) Total Net written premiums by client location: United States $ 241.0 $ 229.5 $ 119.6 $ 11.4 $ 601.5 Europe 148.4 25.1 76.0 0.1 249.6 Canada, the Caribbean, Bermuda and Latin America 69.7 8.6 7.4 — 85.7 Asia and Other 110.0 23.0 25.3 0.3 158.6 Total net written premium by client location for the nine months ended September 30, 2018 $ 569.1 $ 286.2 $ 228.3 $ 11.8 $ 1,095.4 Net written premiums by underwriting location: United States $ 28.8 $ 81.0 $ 9.3 $ 11.5 $ 130.6 Europe 271.5 164.5 132.8 — 568.8 Canada, the Caribbean, Bermuda and Latin America 224.0 40.1 84.3 — 348.4 Asia and Other 44.8 0.6 1.9 0.3 47.6 Total written premiums by underwriting location for the nine months ended September 30, 2018 $ 569.1 $ 286.2 $ 228.3 $ 11.8 $ 1,095.4 Unauditedsixnine months ended JuneSeptember 30, 2019 and 2018: Three months ended
June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, (Millions) 2019 2018 2019 2018 2019 2018 2019 2018 Gross beginning balance $ 1,976.3 $ 1,875.9 $ 2,016.7 $ 1,898.5 $ 2,023.3 $ 1,827.1 $ 2,016.7 $ 1,898.5 Less beginning reinsurance recoverable on unpaid losses (349.3 ) (327.8 ) (350.2 ) (319.7 ) (357.4 ) (358.3 ) (350.2 ) (319.7 ) Net loss and LAE reserve balance 1,627.0 1,548.1 1,666.5 1,578.8 1,665.9 1,468.8 1,666.5 1,578.8 Losses and LAE incurred relating to: Current year losses 214.1 161.8 381.4 305.3 342.2 270.5 723.6 575.8 Prior years losses 63.9 (10.4 ) 80.5 (12.9 ) 6.4 (10.1 ) 86.9 (23.0 ) ��� Total net incurred losses and LAE 278.0 151.4 461.9 292.4 348.6 260.4 810.5 552.8 Foreign currency translation adjustment to net loss and LAE reserves 3.4 (22.2 ) - (15.5 ) (15.3 ) (5.4 ) (15.3 ) (20.9 ) Acquisitions (See Note 3) — 0.2 — 0.2 Accretion of fair value adjustment to net loss and LAE reserves 0.1 - 0.1 - — 0.1 0.1 0.1 Loss and LAE paid relating to: Current year losses 120.9 40.7 157.1 72.0 97.7 80.5 254.8 152.5 Prior years losses 121.7 167.8 305.5 314.9 108.0 101.6 413.5 416.5 Total loss and LAE payments 242.6 208.5 462.6 386.9 205.7 182.1 668.3 569.0 Net ending balance 1,665.9 1,468.8 1,665.9 1,468.8 1,793.5 1,542.0 1,793.5 1,542.0 Plus ending reinsurance recoverable on unpaid losses 357.4 358.3 357.4 358.3 392.9 349.0 392.9 349.0 Gross ending balance $ 2,023.3 $ 1,827.1 $ 2,023.3 $ 1,827.1 $ 2,186.4 $ 1,891.0 $ 2,186.4 $ 1,891.0 JuneSeptember 30, 2019JuneSeptember 30, 2019, Sirius Group had net unfavorable loss reserve development of $63.9$6.4 million. Increases in loss reserve estimates were primarily recorded in Global Property ($55.6 million), Specialty & Casualty ($6.010.2 million), and Runoff & Other ($3.0 million). The unfavorable due to higher than expected claims activity in the Casualty Reinsurance book. These increases were partially offset by favorable loss reserve development in Global Property was primarily attributable to higher prior year catastrophe events, including $46.4 million from Typhoon Jebi.JuneSeptember 30, 2018JuneSeptember 30, 2018, Sirius Group had net favorable loss reserve development of $10.4 million. The major reductions in loss reserve estimates were recorded in Global A&H ($4.6 million), Specialty & Casualty ($3.1 million), and Runoff & Other ($3.1 million). These reductions were partially offset by increases in Global Property loss reserve development of $0.6 million resulting from higher than expected reporting from recent accident years.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedLoss and LAE development - Six Months Ended June 30, 2019For the six months ended June 30, 2019, Sirius Group had net unfavorable loss reserve development of $80.5 million. Increases in loss reserve estimates were recorded in Global Property ($67.2 million), Specialty & Casualty ($4.6 million), Global A&H ($4.5 million), and Runoff & Other ($4.2 million). The unfavorable loss reserve development in Global Property was primarily attributable to higher prior year catastrophe events, including $46.4 million from Typhoon Jebi, $7.3 million from Hurricane Florence, $7.2 million from Hurricane Irma, and $6.3 million from Hurricane Michael.Loss and LAE development - Six Months Ended June 30, 2018For the six months ended June 30, 2018, Sirius Group had net favorable loss reserve development of $12.9$10.1 million. The major reductions in loss reserve estimates were recorded in Runoff & Other ($12.010.6 million), Specialty & Casualty ($10.47.3 million), and Global A&H ($8.43.0 million). The reduction in Runoff & Other was primarily due to decrease in runoff casualty reserves from older accident years, whereas Specialty & Casualty was due to favorable loss reserve development across all business lines in more recent accident years. These reductions were partially offset by increases in Global Property loss reserve development of $10.8 million resulting from higher than expected reporting from recent accident years.Company.Company in addition to favorable loss reserve development in runoff casualty reserves. In addition, Specialty & Casualty had favorable loss reserve development across all business lines, in particular Aviation & Space with $12.0 million. These reductions were partially offset by increases in Global Property loss reserve development of $17.9$28.7 million resulting from higher than expected reporting from recent accident years, including $4.6$7.4 million of increases from natural catastrophes, including the 2017 North American natural catastrophes. Also, in Other Property, there was loss deterioration from recent accident years reported in client account statements received, in the first quarter, which accounted for the remainder of Global Property unfavorable loss development in the sixnine months ended JuneSeptember 30, 2018.JuneSeptember 30, 2019, Sirius Group had reinsurance recoverables on paid losses of $69.8$55.2 million and reinsurance recoverables of $357.4$392.9 million on unpaid losses. At December 31, 2018, Sirius Group had reinsurance recoverables on paid losses of $55.0 million and reinsurance recoverables of $350.2 million on unpaid losses. Because retrocessional reinsurance contracts do not relieve Sirius Group of its obligation to its insureds, the collectability of balances due from Sirius Group's reinsurers is important to its financial strength. Sirius Group monitors the financial strength and ratings of retrocessionaires on an ongoing basis. Uncollectible amounts historically have not been significant.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedsixnine months ended JuneSeptember 30, 2019 and 2018 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, For the three months ended September 30, For the nine months ended September 30, (Millions) 2019 2018 2019 2018 2019 2018 2019 2018 Fixed maturity investments $ 13.1 $ 13.7 $ 27.2 $ 23.6 $ 12.8 $ 14.2 $ 40.0 $ 37.8 Short-term investments 4.8 0.5 7.9 1.3 4.1 2.4 12.0 3.7 Equity securities 7.1 7.1 9.8 8.3 2.7 5.9 12.5 14.2 Other long-term investments 3.2 1.3 7.1 2.5 5.2 2.7 12.3 5.2 Total investment income 28.2 22.6 52.0 35.7 24.8 25.2 76.8 60.9 Investment expenses (3.8 ) (3.4 ) (7.5 ) (5.7 ) (2.0 ) (3.4 ) (9.5 ) (9.1 ) Net investment income $ 24.4 $ 19.2 $ 44.5 $ 30.0 $ 22.8 $ 21.8 $ 67.3 $ 51.8 sixnine months ended JuneSeptember 30, 2019 and 2018 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Gross realized gains $ 26.9 $ 12.0 $ 41.0 $ 20.4 Gross realized (losses) (11.3 ) (4.2 ) (16.4 ) (16.3 ) Net realized gains (losses) on investments(1)(2) 15.6 7.8 24.6 4.1 Net unrealized gains (losses) on investments(3)(4) 15.5 24.7 89.5 40.7 Net realized and unrealized gains (losses) on investments $ 31.1 $ 32.5 $ 114.1 $ 44.8 For the three months ended September 30, For the nine months ended September 30, (Millions) 2019 2018 2019 2018 Gross realized gains $ 22.1 $ 11.3 $ 63.1 $ 31.7 Gross realized (losses) (6.8 ) (7.4 ) (23.2 ) (23.7 ) 15.3 3.9 39.9 8.0 53.9 (11.7 ) 143.4 29.0 Net realized and unrealized gains (losses) on investments $ 69.2 $ (7.8 ) $ 183.3 $ 37.0 $9.7$14.0 and $7.1$4.7 of realized gains due to foreign currency for the three months ended JuneSeptember 30, 2019 and 2018, respectively.$20.5$34.5 and $6.0$10.7 of realized gains due to foreign currency for the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively.$(7.2)$33.9 and $29.7$(5.5) of unrealized (losses) gains due to foreign currency for the three months ended JuneSeptember 30, 2019 and 2018, respectively.Includes $17.851.7 and $48.6$43.1 of unrealized gains due to foreign currency for the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited (losses) (losses) for the three months and sixnine months ended JuneSeptember 30, 2019 and 2018 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ 8.1 $ 3.6 $ 14.9 $ 0.8 Equity securities (1.2 ) 1.7 (1.8 ) 0.2 Short-term investments 3.1 - 3.2 - Derivative instruments (0.2 ) - (0.8 ) - Other long-term investments 5.8 2.5 9.1 3.1 Net realized investment gains (losses) $ 15.6 $ 7.8 $ 24.6 $ 4.1 For the three months ended September 30, For the nine months ended September 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ 7.5 $ 4.2 $ 22.4 $ 5.0 Equity securities 1.7 (0.6 ) (0.1 ) (0.4 ) Short-term investments 6.5 — 9.7 — Derivative instruments (0.7 ) — (1.5 ) — Other long-term investments 0.3 0.3 9.4 3.4 Net realized investment gains $ 15.3 $ 3.9 $ 39.9 $ 8.0 sixnine months ended JuneSeptember 30, 2019 and 2018 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ 11.0 $ 17.8 $ 40.7 $ 20.8 Equity securities 13.3 (5.2 ) 38.4 1.2 Short-term investments (0.9 ) - 1.8 - Derivative instruments (0.1 ) - (0.7 ) - Other long-term investments (7.8 ) 12.1 9.3 18.7 Net unrealized investment (losses) gains $ 15.5 $ 24.7 $ 89.5 $ 40.7 For the three months ended September 30, For the nine months ended September 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ 31.4 $ (8.6 ) $ 72.1 $ 12.2 Equity securities 12.0 0.9 50.4 2.1 Short-term investments 4.6 — 6.4 — Derivative instruments 0.9 — 0.2 — Other long-term investments 5.0 (4.0 ) 14.3 14.7 Net unrealized investment gains (losses) $ 53.9 $ (11.7 ) $ 143.4 $ 29.0 sixnine months ended JuneSeptember 30, 2019 and 2018: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ - $ (2.1 ) $ - $ (2.1 ) Other long-term investments - 7.3 8.8 7.7 Total unrealized investment gains (losses) – Level 3 investments $ - $ 5.2 $ 8.8 $ 5.6 For the three months ended September 30, For the nine months ended September 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ — $ 0.1 $ — $ (2.0 ) Other long-term investments (0.3 ) (1.6 ) 10.1 6.1 Total unrealized investment (losses) gains – Level 3 investments $ (0.3 ) $ (1.5 ) $ 10.1 $ 4.1 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018, were as follows: June 30, 2019 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
(losses) Net foreign
currency
gains
(losses) Fair value Corporate debt securities $ 588.8 $ 5.0 $ (1.1 ) $ 13.9 $ 606.6 Residential mortgage-backed securities 381.5 9.9 (1.7 ) 8.3 398.0 Asset-backed securities 510.9 1.0 (1.8 ) 3.5 513.6 Commercial mortgage-backed securities 106.3 0.8 (0.5 ) 1.2 107.8 Non-U.S. government and government agency 27.9 - - 0.6 28.5 U.S. government and government agency 155.1 1.1 (0.1 ) 1.3 157.4 Preferred stocks 1.1 0.1 - - 1.2 U.S. States, municipalities and political subdivision 2.6 - - - 2.6 Total fixed maturity investments $ 1,774.2 $ 17.9 $ (5.2 ) $ 28.8 $ 1,815.7 September 30, 2019 (Millions) Fair value Corporate debt securities $ 517.7 $ 6.3 $ (0.3 ) $ 24.0 $ 547.7 Asset-backed securities 501.4 1.1 (1.9 ) 6.6 507.2 Residential mortgage-backed securities 365.9 11.9 (0.8 ) 14.5 391.5 U.S. government and government agency 157.6 1.7 — 3.0 162.3 Commercial mortgage-backed securities 102.0 1.2 (0.4 ) 1.8 104.6 Non-U.S. government and government agency 37.8 0.3 (0.1 ) 0.4 38.4 Preferred stocks 18.0 0.1 (0.1 ) (0.1 ) 17.9 U.S. States, municipalities and political subdivision 1.7 — — 0.1 1.8 Total fixed maturity investments $ 1,702.1 $ 22.6 $ (3.6 ) $ 50.3 $ 1,771.4 December 31, 2018 December 31, 2018 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
(losses) Net foreign
currency
gains
(losses) Fair value Fair value Corporate debt securities $ 694.1 $ 1.4 $ (7.3 ) $ 7.6 $ 695.8 $ 694.1 $ 1.4 $ (7.3 ) $ 7.6 $ 695.8 Asset-backed securities 496.3 0.1 (3.8 ) 1.9 494.5 496.3 0.1 (3.8 ) 1.9 494.5 Residential mortgage-backed securities 413.0 1.7 (7.1 ) 5.9 413.5 413.0 1.7 (7.1 ) 5.9 413.5 U.S. government and government agency 163.9 0.3 (0.5 ) 4.2 167.9 163.9 0.3 (0.5 ) 4.2 167.9 Commercial mortgage-backed securities 117.7 0.2 (2.7 ) 0.7 115.9 117.7 0.2 (2.7 ) 0.7 115.9 Non-U.S. government and government agency 50.6 - (0.2 ) (0.1 ) 50.3 50.6 — (0.2 ) (0.1 ) 50.3 Preferred stocks 14.5 0.6 (6.8 ) 0.2 8.5 14.5 0.6 (6.8 ) 0.2 8.5 U.S. States, municipalities and political subdivision 2.8 - - - 2.8 2.8 — — — 2.8 Total fixed maturity investments $ 1,952.9 $ 4.3 $ (28.4 ) $ 20.4 $ 1,949.2 $ 1,952.9 $ 4.3 $ (28.4 ) $ 20.4 $ 1,949.2 JuneSeptember 30, 2019 was approximately 1.51.6 years, including short-term investments, and approximately 2.22.5 years excluding short-term investments.UnauditedJuneSeptember 30, 2019 and December 31, 2018 are presented below 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. June 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 (Millions) Cost or
amortized cost Fair value Cost or
amortized cost Fair value Fair value Fair value Due in one year or less $ 197.9 $ 202.9 $ 249.6 $ 254.6 $ 155.5 $ 162.6 $ 249.6 $ 254.6 Due after one year through five years 523.5 538.7 635.6 636.4 487.3 513.6 635.6 636.4 Due after five years through ten years 52.9 53.4 26.2 25.7 40.8 41.7 26.2 25.7 Due after ten years 0.1 0.1 0.1 0.1 31.2 32.3 0.1 0.1 Mortgage-backed and asset-backed securities 998.7 1,019.4 1,026.9 1,023.9 969.3 1,003.3 1,026.9 1,023.9 Preferred stocks 1.1 1.2 14.5 8.5 18.0 17.9 14.5 8.5 Total $ 1,774.2 $ 1,815.7 $ 1,952.9 $ 1,949.2 $ 1,702.1 $ 1,771.4 $ 1,952.9 $ 1,949.2 JuneSeptember 30, 2019 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 AAA $ 597.8 $ 602.0 $ 573.5 $ 602.0 AA 746.8 818.0 740.8 818.0 A 278.2 290.5 257.9 290.5 BBB 133.5 167.4 120.4 167.4 Other 59.4 71.3 78.8 71.3 Total fixed maturity investments(1) $ 1,815.7 $ 1,949.2 $ 1,771.4 $ 1,949.2 JuneSeptember 30, 2019, the above totals included $51.6$50.0 million of sub-prime securities. Of this total, $22.4$26.1 million was rated AAA, $17.4$19.8 million rated AA, $7.1$3.9 million rated A and $4.7$0.2 million classified as Other. At December 31, 2018, the above totals included $42.6 million of sub-prime securities. Of this total, $17.1 million was rated AAA, $9.8 million rated AA, $6.0 million rated A, $4.7 million rated BBB and $5.0 million classified as Other.losses, and fair values of Sirius Group's equity securities and other long-term investments as of JuneSeptember 30, 2019 and December 31, 2018, were as follows: June 30, 2019 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
losses Net foreign
currency
gains Fair value Equity securities $ 376.2 $ 38.6 $ (36.7 ) $ 9.7 $ 387.8 Other long-term investments $ 349.9 $ 44.2 $ (24.6 ) $ 10.4 $ 379.9 September 30, 2019 (Millions) Fair value Equity securities $ 359.4 $ 46.8 $ (35.2 ) $ 13.3 $ 384.3 Other long-term investments $ 332.6 $ 52.7 $ (29.7 ) $ 12.8 $ 368.4 December 31, 2018 (Millions) Fair value Equity securities $ 409.4 $ 17.8 $ (50.8 ) $ 3.6 $ 380.0 Other long-term investments $ 337.6 $ 32.6 $ (13.5 ) $ 8.3 $ 365.0 Unaudited December 31, 2018 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
losses Net foreign
currency
gains Fair value Equity securities $ 409.4 $ 17.8 $ (50.8 ) $ 3.6 $ 380.0 Other long-term investments $ 337.6 $ 32.6 $ (13.5 ) $ 8.3 $ 365.0 JuneSeptember 30, 2019 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 Investment grade fixed income mutual funds $ 151.9 $ 157.7 Common stocks 233.4 222.3 Other 2.5 - Total Equity securities $ 387.8 $ 380.0 (Millions) September 30, 2019 December 31, 2018 Investment grade fixed income mutual funds $ 150.9 $ 157.7 Common stocks 231.8 222.3 Other 1.6 — Total Equity securities $ 384.3 $ 380.0 JuneSeptember 30, 2019 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 Hedge funds and private equity funds $ 291.9 $ 301.4 Limited liability companies and private equity securities 88.0 63.6 Total other long-term investments $ 379.9 $ 365.0 (Millions) September 30, 2019 December 31, 2018 Hedge funds and private equity funds $ 287.7 $ 301.4 Limited liability companies and private equity securities 80.7 63.6 Total other long-term investments $ 368.4 $ 365.0 JuneSeptember 30, 2019, Sirius Group held investments in 9 hedge funds and 29 private equity funds. The largest investment in a single fund was $49.6$52.3 million as of JuneSeptember 30, 2019 and $54.8 million as of December 31, 2018.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018
(Millions)
Fair Value Unfunded
Commitments
Fair Value Unfunded
Commitments Fair Value Fair Value Hedge funds: Long/short multi-sector $ 47.7 $ - $ 41.0 $ - $ 50.6 $ — $ 41.0 $ — Distressed mortgage credit 49.6 - 54.8 - 52.3 — 54.8 — Private Credit 20.8 - 20.0 21.2 — 20.0 — Other 2.3 - 2.5 - 1.5 — 2.5 — Total hedge funds 120.4 - 118.3 - 125.6 — 118.3 — Private equity funds: Energy infrastructure & services 74.8 41.9 93.7 54.2 64.2 41.4 93.7 54.2 Multi-sector 6.5 0.7 9.0 0.7 10.4 7.9 9.0 0.7 Healthcare 35.6 11.7 31.7 15.6 31.9 10.8 31.7 15.6 Life settlement 24.8 - 23.7 - 25.7 — 23.7 — Manufacturing/Industrial 27.5 4.0 23.6 10.4 27.8 3.8 23.6 10.4 Private equity secondaries 0.8 0.8 1.1 1.1 0.6 0.8 1.1 1.1 Real estate 0.3 - 0.3 - 0.3 — 0.3 — Other 1.2 2.6 - - 1.2 2.5 — — Total private equity funds 171.5 61.7 183.1 82.0 162.1 67.2 183.1 82.0 Total hedge and private equity funds included in other long-term investments $ 291.9 $ 61.7 $ 301.4 $ 82.0 $ 287.7 $ 67.2 $ 301.4 $ 82.0 JuneSeptember 30, 2019 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:
(Millions) 30-59 days
notice 60-89 days
notice 90-119 days
notice 120+ days
notice Total $ - $ 32.3 $ - $ - $ 32.3 0.8 - - - 0.8 - 0.7 - - 0.7 - 15.4 50.4 20.8 86.6 $ 0.8 $ 48.4 $ 50.4 $ 20.8 $ 120.4 Notice Period Redemption Frequency
(Millions)Total Monthly $ — $ 35.7 $ — $ — $ 35.7 Quarterly 0.8 — — — 0.8 Semi-annual — 0.3 — — 0.3 Annual — 14.9 52.7 21.2 88.8 Total $ 0.8 $ 50.9 $ 52.7 $ 21.2 $ 125.6 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019, no distributions were outstanding from these investments. Investments in private equity funds are generally subject to a "lock-up" period during which investors may not request a redemption. 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.JuneSeptember 30, 2019, investments in private equity funds were subject to lock-up periods as follows: 1 - 3 years 3 – 5 years 5 – 10 years Total $ 10.6 $ 4.2 $ 156.7 $ 171.5 (Millions) 1 - 3 years 3 – 5 years 5 – 10 years Total Private Equity Funds – expected lock up period remaining $ 10.3 $ 3.3 $ 148.5 $ 162.1 JuneSeptember 30, 2019 and December 31, 2018 investments of $802.8$797.8 million and $792.4 million, respectively, were held in trusts required to be maintained in relation to various reinsurance agreements. Sirius Group's reinsurance operations are required to maintain deposits with certain insurance regulatory agencies in order to maintain their insurance licenses. The fair value of such deposits that are included within total investments totaled $814.4$817.5 million and $801.2 million as of JuneSeptember 30, 2019 and December 31, 2018, respectively.JuneSeptember 30, 2019, Sirius Group held $0.2 million of collateral in the form of short-term investments associated with Interest Rate Cap agreements. (SeeNote 11.)JuneSeptember 30, 2019 and December 31, 2018 Sirius Group reported $2.6$34.7 million and $3.2 million, respectively, in Accounts payable on unsettled investment purchases.JuneSeptember 30, 2019 and December 31, 2018, Sirius Group reported $2.0$12.9 million and $5.0 million, respectively, in Accounts receivable on unsettled investment sales.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedUnauditedUnauditedUnauditedJuneSeptember 30, 2019 and December 31, 2018 by level: June 30, 2019 September 30, 2019 (Millions) Fair
Value Level 1
Inputs Level 2
Inputs Level 3
Inputs Assets measured at fair value Fixed maturity investments: U.S. Government and government agency $ 157.4 $ 156.0 $ 1.4 $ - $ 162.3 $ 160.9 $ 1.4 $ — Corporate debt securities 606.6 - 606.6 - 547.7 — 547.7 — Residential mortgage-backed securities 398.0 - 398.0 - 391.5 — 391.5 — Asset-backed securities 513.6 - 513.6 - 507.2 — 507.2 — Commercial mortgage-backed securities 107.8 - 107.8 - 104.6 — 104.6 — Non-U.S. government and government agency 28.5 28.5 - - 38.4 21.3 17.1 — Preferred stocks 1.2 - 1.2 - 17.9 — 0.9 17.0 U.S. States, municipalities, and political subdivision 2.6 - 2.6 - 1.8 — 1.8 — Total fixed maturity investments 1,815.7 184.5 1,631.2 - 1,771.4 182.2 1,572.2 17.0 Equity securities: Investment grade fixed income mutual funds 151.9 151.9 - - 150.9 150.9 — — Common stocks 233.4 233.4 - - 231.8 231.8 — — Other 2.5 - 2.5 - 1.6 — 1.6 — Total equity securities 387.8 385.3 2.5 - 384.3 382.7 1.6 — Short-term investments 882.9 845.6 37.3 - 989.3 978.8 10.5 — Other long-term investments(1) 88.0 - - 88.0 80.7 — — 80.7 Total investments $ 3,174.4 $ 1,415.4 $ 1,671.0 $ 88.0 $ 3,225.7 $ 1,543.7 $ 1,584.3 $ 97.7 Derivative instruments 2.9 0.8 - 2.1 6.3 1.6 — 4.7 Total assets measured at fair value $ 3,177.3 $ 1,416.2 $ 1,671.0 $ 90.1 $ 3,232.0 $ 1,545.3 $ 1,584.3 $ 102.4 Liabilities measured at fair value Contingent consideration liabilities $ 30.8 $ - $ - $ 30.8 $ 26.0 $ — $ — $ 26.0 Derivative instruments 6.0 0.3 - 5.7 6.9 — — 6.9 Total liabilities measured at fair value $ 36.8 $ 0.3 $ - $ 36.5 $ 32.9 $ — $ — $ 32.9 $291.9$287.7 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.Unaudited December 31, 2018 December 31, 2018 (Millions) Fair
value Level 1
inputs Level 2
inputs Level 3
inputs Assets measured at fair value Fixed maturity investments: U.S. Government and government agency $ 167.9 $ 164.7 $ 3.2 $ - $ 167.9 $ 164.7 $ 3.2 $ — Corporate debt securities 695.8 - 695.8 - 695.8 — 695.8 — Asset-backed securities 494.5 - 494.5 - 494.5 — 494.5 — Residential mortgage-backed securities 413.5 - 413.5 - 413.5 — 413.5 — Commercial mortgage-backed securities 115.9 - 115.9 - 115.9 — 115.9 — Non-U.S. government and government agency 50.3 42.9 7.4 - 50.3 42.9 7.4 — Preferred stocks 8.5 - 3.1 5.4 8.5 — 3.1 5.4 U.S. States, municipalities, and political subdivision 2.8 - 2.8 - 2.8 — 2.8 — Total fixed maturity investments 1,949.2 207.6 1,736.2 5.4 1,949.2 207.6 1,736.2 5.4 Short-term investments 715.5 679.3 36.2 - 715.5 679.3 36.2 — Equity securities: Investment grade fixed income mutual funds 157.7 157.7 - - 157.7 157.7 — — Common stocks 222.3 222.3 - - 222.3 222.3 — — Total equity securities 380.0 380.0 - - 380.0 380.0 — — Other long-term investments(1) 63.6 - - 63.6 63.6 — — 63.6 Total investments $ 3,108.3 $ 1,266.9 $ 1,772.4 $ 69.0 $ 3,108.3 $ 1,266.9 $ 1,772.4 $ 69.0 Derivative instruments 4.1 - - 4.1 4.1 — — 4.1 Total assets measured at fair value $ 3,112.4 $ 1,266.9 $ 1,772.4 $ 73.1 $ 3,112.4 $ 1,266.9 $ 1,772.4 $ 73.1 Liabilities measured at fair value Contingent consideration liabilities $ 28.8 $ - $ - $ 28.8 $ 28.8 $ — $ — $ 28.8 Derivative instruments 5.1 0.5 - 4.6 5.1 0.5 — 4.6 Total liabilities measured at fair value $ 33.9 $ 0.5 $ - $ 33.4 $ 33.9 $ 0.5 $ — $ 33.4 JuneSeptember 30, 2019 and JuneSeptember 30, 2018: Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) $ - $ 88.0 $ (4.8 ) $ (28.8 ) - - (0.6 ) (2.0 ) - - - - - - - - - - 1.8 - $ - $ 88.0 $ (3.6 ) $ (30.8 ) For the three months ended September 30, 2019 (Millions) Balance at June 30, 2019 $ — $ 88.0 $ (3.6 ) $ (30.8 ) Total realized and unrealized gains (losses) — (0.3 ) (2.0 ) (2.1 ) Foreign currency gains (losses) through Other Comprehensive Income — (1.0 ) — — Purchases 17.0 — — — Sales/Settlements — (6.0 ) 3.4 6.9 Balance at September 30, 2019 $ 17.0 $ 80.7 $ (2.2 ) $ (26.0 ) $291.9$287.7 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient. Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) $ 8.6 $ 64.9 $ (6.1 ) $ (42.8 ) (2.1 ) 8.5 5.6 - - (1.3 ) - - - 0.5 - - (0.5 ) (3.6 ) (5.3 ) - $ 6.0 $ 69.0 $ (5.8 ) $ (42.8 ) For the three months ended September 30, 2018 (Millions) Balance at June 30, 2018 $ 6.0 $ 69.0 $ (5.8 ) $ (42.8 ) Total realized and unrealized gains (losses) 0.1 (1.6 ) 1.7 — Foreign currency gains (losses) through Other Comprehensive Income — 0.1 — — Purchases 2.4 0.2 — — Sales/Settlements — (0.2 ) (0.7 ) 0.9 Balance at September 30, 2018 $ 8.5 $ 67.5 $ (4.8 ) $ (41.9 ) $247.6$281.5 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.Unauditedsixnine months ended JuneSeptember 30, 2019 and JuneSeptember 30, 2018: Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) $ 5.4 $ 63.6 $ (0.5 ) $ (28.8 ) - 9.3 (5.8 ) (2.0 ) - (0.7 ) - - - 15.8 - - (5.4 ) - 2.7 - $ - $ 88.0 $ (3.6 ) $ (30.8 ) For the nine months ended September 30, 2019 (Millions) Balance at December 31, 2018 $ 5.4 $ 63.6 $ (0.5 ) $ (28.8 ) Total realized and unrealized gains (losses) — 10.6 (7.7 ) (4.1 ) Foreign currency gains (losses) through Other Comprehensive Income — (1.5 ) — — Purchases 17.0 15.8 — — Sales/Settlements (5.4 ) (7.8 ) 6.0 6.9 Balance at September 30, 2019 $ 17.0 $ 80.7 $ (2.2 ) $ (26.0 ) $291.9$287.7 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient. For the six months ended June 30, 2018 (Millions) Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) Balance at December 31, 2017 $ 8.0 $ 64.2 $ (6.1 ) $ (42.8 ) Total realized and unrealized gains (losses) (2.1 ) 9.3 5.6 - Foreign currency gains (losses) through Other Comprehensive Income - (1.6 ) - - Purchases 0.6 0.9 - - Sales/Settlements (0.5 ) (3.8 ) (5.3 ) - Balance at June 30, 2018 $ 6.0 $ 69.0 $ (5.8 ) $ (42.8 ) For the nine months ended September 30, 2018 (Millions) Balance at December 31, 2017 $ 8.0 $ 64.2 $ (6.1 ) $ (42.8 ) Total realized and unrealized gains (losses) (2.0 ) 7.7 7.3 — Foreign currency gains (losses) through Other Comprehensive Income — (1.5 ) — — Purchases 3.0 1.2 — — Sales/Settlements (0.5 ) (4.1 ) (6.0 ) 0.9 Balance at September 30, 2018 $ 8.5 $ 67.5 $ (4.8 ) $ (41.9 ) $247.6$281.5 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.JuneSeptember 30, 2019 and 2018. There were no transfers between Level 3 and Level 2 measurements during the six months ended June 30, 2019 and 2018.JuneSeptember 30, 2019 and December 31, 2018, and includes only those instruments for which information about the inputs is reasonably available to Sirius Group, such as data from independent third-party valuation service providers and from internal valuation models. (Millions, except share prices) June 30, 2019 September 30, 2019 Description Valuation Technique(s) Fair value Unobservable input Valuation Technique(s) Fair value Unobservable input Private equity securities(1) Share price of recent transaction $ 32.5 Purchase share price $ 40.63 Share price of recent transaction $ 32.5 Purchase share price $ 40.63 Share price of recent transaction $ 17.5 Purchase price $ 7.74 Preferred stock(1) Share price of recent transaction $ 17.5 Purchase price $ 7.74 Purchase price of recent transaction $ 12.2 Purchase price $ 12.2 Private equity securities(1) Multiple of GAAP book value $ 16.8 Book value multiple 1.0 X Multiple of GAAP book value $ 16.6 Book value multiple 1.0X Private debt instrument(1) Purchase price of recent transaction $ 7.8 Purchase price $ 9.0 Purchase price of recent transaction $ 7.8 Purchase price $ 9.0 Private debt instrument(1) Purchase price of recent transaction $ 6.0 Purchase price $ 6.0 Private equity securities(1) Share price of recent transaction $ 5.1 Purchase price $ 7.74 Share price of recent transaction $ 5.1 Purchase price $ 7.74 Purchase price of recent transaction $ 4.8 Purchase price $ 4.8 Weather derivatives(2) Third party appraisal $ 1.7 Broker quote $ 1.7 Third party appraisal $ 4.0 Broker quote $ 4.0 Private equity securities(1) Purchase price of recent transaction $ 1.0 Purchase price $ 10.0 Private equity securities(1) Purchase price of recent transaction $ 0.8 Purchase price $ 0.8 Purchase price of recent transaction $ 1.0 Purchase price $ 10.0 Equity warrants Option pricing model $ 0.4 Strike price $ 0.2 Option pricing model $ 0.7 Strike price $ 0.2 Private equity securities(1) Purchase price of recent transaction $ 0.3 Purchase price $ 0.3 Purchase price of recent transaction $ 0.2 Purchase price $ 0.2 Private debt instrument(1) Purchase price of recent transaction $ 0.2 Purchase price $ 0.2 Currency forwards(2) Third party appraisal $ 0.2 Broker quote $ 0.2 Currency swaps(2) Third party appraisal $ (3.8 ) Broker quote $ (3.8 ) Third party appraisal $ (1.2 ) Broker quote $ (1.2 ) Third party appraisal $ (5.7 ) Broker quote $ (5.7 ) Contingent consideration External valuation model $ (30.8 ) Discounted future payments $ (30.8 ) External valuation model $ (26.0 ) Discounted future payments $ (26.0 ) JuneSeptember 30, 2019, each asset type consists of one security.(2)SeeNote 11for discussion of derivative instruments. �� (Millions, except share prices) December 31, 2018 December 31, 2018 Description Valuation Technique(s) Fair value Unobservable input Valuation Technique(s) Fair value Unobservable input Private equity securities(1) Share price of recent transaction $ 32.5 Purchase share price $ 40.63 Share price of recent transaction $ 32.5 Purchase share price $ 40.63 Private equity securities(1) Multiple of GAAP book value $ 14.7 Book value multiple 0.9 X Multiple of GAAP book value $ 14.7 Book value multiple 0.9X Private debt instrument(1) Purchase price of recent transaction $ 9.0 Purchase price $ 9.0 Purchase price of recent transaction $ 9.0 Purchase price $ 9.0 Private debt instrument(1) Purchase price of recent transaction $ 6.0 Purchase price $ 6.0 Purchase price of recent transaction $ 6.0 Purchase price $ 6.0 Preferred stock(1) Share price of recent transaction $ 4.6 Purchase price $ 1.88 Share price of recent transaction $ 4.6 Purchase price $ 1.88 Weather derivatives(2) Third party appraisal $ 3.9 Broker quote $ 3.9 Third party appraisal $ 3.9 Broker quote $ 3.9 Private equity securities(1) Purchase price of recent transaction $ 0.9 Purchase price $ 1.88 Purchase price of recent transaction $ 0.9 Purchase price $ 1.88 Preferred stock(1) Share price of recent transaction $ 0.8 Purchase price $ 0.8 Share price of recent transaction $ 0.8 Purchase price $ 0.8 Private equity securities(1) Share price of recent transaction $ 0.3 Purchase price $ 10.0 Share price of recent transaction $ 0.3 Purchase price $ 10.0 Private debt instrument(1) Purchase price of recent transaction $ 0.2 Purchase price $ 0.2 Purchase price of recent transaction $ 0.2 Purchase price $ 0.2 Interest rate cap(2) Third party appraisal $ 0.2 Broker quote $ 0.2 Third party appraisal $ 0.2 Broker quote $ 0.2 Currency swaps(2) Third party appraisal $ (4.6 ) Broker quote $ (4.6 ) Third party appraisal $ (4.6 ) Broker quote $ (4.6 ) Contingent consideration External valuation model $ (28.8 ) Discounted future payments $ (28.8 ) External valuation model $ (28.8 ) Discounted future payments $ (28.8 ) (2)SeeNote 11for discussion of derivative instruments.UnauditedJuneSeptember 30, 2019 and December 31, 2018, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 3. The following table includes financial instruments for which the carrying value differs from the estimated fair values at JuneSeptember 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 (Millions) Fair Value(1) Carrying Value Fair Value(1) Carrying Value Liabilities, Mezzanine equity, and Non-controlling interest: 2017 SEK Subordinated Notes $ 297.0 $ 292.3 $ 309.5 $ 303.6 2016 SIG Senior Notes $ 386.9 $ 393.6 $ 347.6 $ 393.2 Series B preference shares $ 205.2 $ 241.3 $ 191.7 $ 232.2 September 30, 2019 December 31, 2018 (Millions) Carrying Value Carrying Value Liabilities, Mezzanine equity, and Non-controlling interest: 2017 SEK Subordinated Notes $ 279.8 $ 276.5 $ 309.5 $ 303.6 2016 SIG Senior Notes $ 397.3 $ 393.8 $ 347.6 $ 393.2 Series B preference shares $ 195.0 $ 236.0 $ 191.7 $ 232.2 JuneSeptember 30, 2019 and December 31, 2018 consisted of the following: (Millions) June 30,
2019 Effective
Rate(1) December 31, 2018 Effective
Rate(1) September 30, 2019 December 31, 2018 2017 SEK Subordinated Notes, at face value $ 296.2 3.9 % $ 307.6 3.8 % $ 280.2 4.0 % $ 307.6 3.8 % (3.9 ) (4.0 ) (3.7 ) (4.0 ) 292.3 303.6 276.5 303.6 2016 SIG Senior Notes, at face value 400.0 4.7 % 400.0 4.7 % 400.0 4.7 % 400.0 4.7 % (2.5 ) (2.6 ) (2.4 ) (2.6 ) (3.9 ) (4.2 ) (3.8 ) (4.2 ) 393.6 393.2 393.8 393.2 Total debt $ 685.9 $ 696.8 $ 670.3 $ 696.8 UnauditedJuneSeptember 30, 2019 and 2018, Sirius Group recognized $0.3$15.9 million and $27.8$(1.6) million, respectively, of foreign currency exchange gains (loss) on the remeasurement of the 2017 SEK Subordinated Notes into USD from SEK. For the nine months ended September 30, 2019 and 2018, Sirius Group recognized $27.2 million and $26.2 million, respectively, of foreign currency exchange gains on the remeasurement of the 2017 SEK Subordinated Notes into USD from SEK. For the six months ended June 30, 2019 and 2018, Sirius Group recognized $11.3 million and $27.8 million, respectively, of foreign currency exchange gains on the remeasurement of the 2017 SEK Subordinated Notes into USD from SEK.JuneSeptember 30, 2019 and 2018, respectively. The effective rate for the sixnine months ended JuneSeptember 30, 2019 and 2018 were 3.9%4.0% and 3.5% annualized, respectively. Sirius Group recorded $3.2$3.0 million and $3.0$2.9 million of interest expense, inclusive of amortization of issuance costs on the 2017 SEK Subordinated Notes for the three months ended JuneSeptember 30, 2019 and 2018, respectively. Sirius Group recorded $6.0$8.9 million and $5.9$8.8 million of interest expense, inclusive of amortization of issuance costs on the 2017 SEK Subordinated Notes for the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively.JuneSeptember 30, 2019 and 2018. Sirius Group recorded $9.6$14.3 million of interest expense, inclusive of amortization of issuance costs on the 2016 SIG Senior Notes, for both the sixnine months ended JuneSeptember 30, 2019 and 2018.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 3.02.9 billion and SEK 2.9 billion, respectively, or $319.0$300.5 million and $321.3 million, respectively (based on the JuneSeptember 30, 2019 and December 31, 2018 SEK to USD exchange rates). As of JuneSeptember 30, 2019 and December 31, 2018, Sirius America Insurance Company's trust arrangements were collateralized by pledged assets and assets in trust of $57.2$57.5 million and $56.2 million, respectively. As of JuneSeptember 30, 2019 and December 31, 2018, Sirius Bermuda's trust arrangements were collateralized by pledged assets and assets in trust of $349.6$350.6 million and $319.7 million, respectively.JuneSeptember 30, 2019, there were no outstanding borrowings under the Facility.JuneSeptember 30, 2019, Sirius Group was in compliance with all of the covenants under the 2017 SEK Subordinated Notes, the 2016 SIG Senior Notes, the Nordea Bank Finland Abp, London Branch facility, and the DNB Bank ASA, Sweden Branch facility. In addition, as of JuneSeptember 30, 2019, Sirius Group was in compliance with all of the covenants under the Facility.JuneSeptember 30, 2019 and 2018 was $8.0$7.7 million and $7.8$7.6 million, respectively. Total interest expense incurred by Sirius Group for its indebtedness for the sixnine months ended JuneSeptember 30, 2019 and 2018 was $15.6$23.3 million and $15.5$23.1 million, respectively. Total interest paid by Sirius Group for its indebtedness for the three months ended JuneSeptember 30, 2019 and 2018 was $12.2$2.8 million and $12.1$2.9 million, respectively. Total interest paid by Sirius Group for its indebtedness for the sixnine months ended JuneSeptember 30, 2019 and 2018 was $14.9$17.7 million and $15.0$17.9 million, respectively.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited$2.1$(3.7) million and $51.2$(6.9) million during the three months ended JuneSeptember 30, 2019 and 2018, respectively, on pre-tax income (loss) of $10.3$(11.3) million and $149.4$(34.6) million, respectively. Sirius Group reported an income tax expense of $19.3$15.6 million and $62.3$55.4 million during the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively, on pre-tax income of $131.6$120.3 million and $203.8$169.2 million, respectively. The effective tax rate for the sixnine months ended JuneSeptember 30, 2019 was 14.5%13.0%, which was lower than the Swedish statutory rate of 21.4% (the rate at which the majority of Sirius Group's worldwide operations are taxed) primarily because of income recognized in jurisdictions with lower rates than Sweden. The effective tax rate for the sixnine months ended JuneSeptember 30, 2018 was 30.6%32.7%, which was higher than the Swedish statutory rate of 22% (the rate at which the majority of Sirius Group's worldwide operations are taxed) primarily because of non-recurring adjustments to Sirius Group's deferred tax assets which resulted from various internal restructurings and changes in Sirius Group's accounting for uncertain tax positions. In arriving at the effective tax rate for the sixnine month periods ended JuneSeptember 30, 2019 and 2018, Sirius Group forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, 2019 and 2018.JuneSeptember 30, 2019 and December 31, 2018.JuneSeptember 30, 2019 is $55.3$45.8 million. Of the $55.3$45.8 million, $32.7$33.6 million relates to net deferred tax assets in U.S. subsidiaries, $130.5$118.5 million relates to net deferred tax assets in Luxembourg subsidiaries, $12.9$13.6 million relates to net deferred tax assets in United Kingdom subsidiaries, $229.7$208.6 million relates to net deferred tax liabilities in Sweden subsidiaries, and $1.7$2.9 million relates to other net deferred tax liability.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019, the total reserve for unrecognized tax benefits is $63.3$59.1 million. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on permanent differences and interest and penalties are not needed, the reversal of $63.2$58.9 million of such reserves as of JuneSeptember 30, 2019 would be recorded as an income tax benefit and would impact the effective tax rate. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on temporary differences are not needed, the reversal of $0.1$0.2 million of such reserves as of JuneSeptember 30, 2019 would not impact the effective tax rate due to deferred tax accounting but would accelerate the payment of cash to the taxing authority. The vast majority of Sirius Group's reserves for unrecognized tax benefits on temporary differences relate to deductions for loss reserves where the timing of the deductions is uncertain.JuneSeptember 30, 2019, the total amount of such reserve was $60.4$56.2 million.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018. Collateral held is recorded within short-term investments with an equal amount recognized as a liability to return collateral. Sirius Group's liability to return that collateral is based on the amounts provided by the counterparties and investment earnings thereon. As at JuneSeptember 30, 2019 and December 31, 2018, Sirius Group held collateral balances of $0.2 million and $0.3 million, respectively.JuneSeptember 30, 2019 and December 31, 2018. Sirius Group does not provide or hold any collateral associated with the swaps.JuneSeptember 30, 2019 and December 31, 2018. Sirius Group does not provide or hold any collateral associated with the weather derivatives.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Notional
Value Asset
derivative
at fair
value(1) Liability
derivative
at fair
value(2) Notional
Value Asset
derivative
at fair
value(1) Liability
derivative
at fair
value(2) $ 250.0 $ - $ - $ 250.0 $ 0.2 $ - $ 250.0 $ — $ — $ 250.0 $ 0.2 $ — $ 90.0 $ - $ 4.9 $ 45.0 $ - $ 4.6 $ 90.0 $ — $ 1.2 $ 45.0 $ — $ 4.6 $ 10.0 $ - $ 0.8 $ - $ - $ - $ (5.0 ) $ — $ 5.7 $ — $ — $ — $ 53.4 $ 1.7 $ - $ 150.5 $ 3.9 $ - $ 95.5 $ 4.0 $ — $ 150.5 $ 3.9 $ — $ (8.1 ) $ - $ - $ - $ - $ - $ 1.8 $ — $ — $ — $ — $ — $ 14.7 $ 0.8 $ 0.3 $ 6.2 $ - $ 0.5 $ 23.4 $ 1.9 $ 0.3 $ 6.2 $ — $ 0.5 $ 0.4 $ 0.4 $ - $ - $ - $ - $ 0.7 $ 0.7 $ — $ — $ — $ — JuneSeptember 30, 2019 and December 31, 2018.JuneSeptember 30, 2019 and December 31, 2018.sixnine months ended JuneSeptember 30, 2019 and 2018:
(Millions) For the three months ended September 30, For the nine months ended September 30, For the three months
ended June 30, For the six months
ended June 30, Derivatives not designated as
hedging instruments Classification of gains
(losses) recognized
in earnings 2019 2018 2019 2018 2019 2018 2019 2018 Interest rate cap Other revenues $ (0.1 ) $ (0.1 ) $ (0.2 ) $ 0.2 Other revenues $ — $ — $ (0.2 ) $ 0.2 Foreign currency swaps Net foreign exchange gains $ 1.6 $ 4.3 $ 2.4 $ 3.0 Net foreign exchange gains $ 3.7 $ (0.1 ) $ 6.1 $ 2.9 Foreign currency forwards Net foreign exchange gains (losses) $ (3.2 ) $ - $ (3.0 ) $ - Net foreign exchange gains (losses) $ (7.8 ) $ — $ (10.8 ) $ — Weather derivatives Other revenues $ 0.6 $ 1.4 $ (5.5 ) $ 2.4 Other revenues $ 1.9 $ 1.8 $ (3.6 ) $ 4.2 Equity futures contracts Net realized investment gains (losses) $ (0.2 ) $ - $ (0.8 ) $ - Net realized investment gains (losses) $ 0.1 $ — $ (0.7 ) $ — Equity futures contracts Net unrealized investment gains $ - $ - $ (0.2 ) $ - Net unrealized investment gains $ (0.5 ) $ — $ (0.6 ) $ — Equity put options Net unrealized investment gains $ (0.1 ) $ 1.4 $ (0.5 ) $ 2.4 Net realized investment gains (losses) $ (0.8 ) $ — $ (0.8 ) $ — Equity put options Net unrealized investment gains $ 0.7 $ — $ 0.2 $ — Equity warrants Net unrealized investment gains $ 0.4 $ - $ 0.4 $ - Net unrealized investment gains $ 0.3 $ — $ 0.7 $ — Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditednon share-basednon-share-based compensation awards to key employees of Sirius Group. As at JuneSeptember 30, 2019, Sirius Group's share-based compensation awards consist of performance shares units, restricted share units, restricted stock and options.JuneSeptember 30, 2019, Sirius Group granted members of the Board of Directors of the Company 34,6152,424 restricted shares.shares and 37,039 restricted shares, respectively. For the sixthree months ended JuneSeptember 30, 2019, Sirius Group granted 401,3117,059 performance share units, 1,411,71416,471 restricted share units, and 2,424 restricted shares. For the nine months ended September 30, 2019, Sirius Group granted 408,370 performance share units, 1,428,185 restricted share units, 1,374,944 officer stock options and 34,615 of37,039 restricted shares.and six months ended JuneSeptember 30, 2019, Sirius Group employees forfeited 14,33543,230 performance share units and 46,05225,936 restricted share units.JuneSeptember 30, 2019 there were $31.8$27.1 million of unrecognized share-based compensation costs, which are expected to be recognized over the next two to three years. There were no unrecognized share-based compensation costs as at JuneSeptember 30, 2018.JuneSeptember 30, 2019 and 2018, respectively: Three months ended June 30, Six months ended June 30, (Millions) 2019 2018 2019 2018 Common shares: Shares issued and outstanding, beginning of period 115,262,303 120,000,000 115,151,251 120,000,000 Issuance of shares to directors and employees 34,615 - 145,667 - Shares issued and outstanding, end of period 115,296,918 120,000,000 115,296,918 120,000,000 Three months ended September 30, Nine months ended September 30, (Millions) 2019 2018 2019 2018 Common shares: Shares issued and outstanding, beginning of period 115,296,918 120,000,000 115,151,251 120,000,000 Issuance of shares to directors and employees 2,424 — 148,091 — Shares issued and outstanding, end of period 115,299,342 120,000,000 115,299,342 120,000,000 sixnine months ended JuneSeptember 30, 2019 and 2018.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018, the balance of the Series B preference shares was $241.3$236.0 million and $232.2 million, respectively.JuneSeptember 30, 2019 and December 31, 2018 Sirius Group's balance sheet included $3.0$3.4 million and $1.7 million, respectively, in non-controlling interests.sixnine months ended JuneSeptember 30, 2019 and 2018: (Millions) For the three
months ended
June 30, 2019 For the three
months ended
June 30, 2018 Non-controlling interests, beginning of the period $ 2.2 $ 0.5 Net income attributable to non-controlling interests 0.8 0.4 Other, net - 0.1 Non-controlling interests, end of the period $ 3.0 $ 1.0 (Millions) For the three months ended September 30, 2019 For the three months ended September 30, 2018 Non-controlling interests, beginning of the period $ 3.0 $ 1.0 Net income attributable to non-controlling interests 0.4 0.3 Other, net — (0.2 ) Non-controlling interests, end of the period $ 3.4 $ 1.1 (Millions) For the six
months ended
June 30, 2019 For the six
months ended
June 30, 2018 Non-controlling interests, beginning of the period $ 1.7 $ 0.2 Net income attributable to non-controlling interests 1.2 0.6 Other, net 0.1 0.2 Non-controlling interests, end of the period $ 3.0 $ 1.0 (Millions) For the nine months ended September 30, 2019 For the nine months ended September 30, 2018 Non-controlling interests, beginning of the period $ 1.7 $ 0.2 Net income attributable to non-controlling interests 1.6 0.9 Other, net 0.1 — Non-controlling interests, end of the period $ 3.4 $ 1.1 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018, Sirius Group recorded non-controlling interest of $2.7$3.3 million and $1.7 million, respectively, in Alstead Re Insurance Company ("Alstead Re"). (SeeNote 16.)Unauditedsixnine months ended JuneSeptember 30, 2019 and 2018: For the three months
ended June 30, For the six months ended
June 30, For the three months ended September 30, For the nine months ended September 30, (Millions, except share and per share information) 2019 2018 2019 2018 2019 2018 2019 2018 Basic earnings per share Numerator: Net income $ 8.2 $ 98.2 $ 112.3 $ 141.5 $ (7.6 ) $ (27.7 ) $ 104.7 $ 113.8 Less: Income attributable to non-controlling interests (0.8 ) (0.4 ) (1.2 ) (0.6 ) (0.4 ) (0.3 ) (1.6 ) (0.9 ) Less: Change in carrying value of Series B preference shares (0.8 ) - (9.2 ) - 5.3 — (3.9 ) — Less: Accrued dividends on Series A redeemable preference shares - - - (2.6 ) — — — (2.6 ) Net income available for dividends out of undistributed earnings $ 6.6 $ 97.8 $ 101.9 $ 138.3 $ (2.7 ) $ (28.0 ) $ 99.2 $ 110.3 Less: Earnings attributable to Series B preference shares (0.6 ) - (9.5 ) - — — (9.3 ) — Less: Earnings attributable to Series A redeemable preference shares - (4.0 ) - (5.7 ) — — — (4.5 ) Net income available to Sirius Group common shareholders $ 6.0 $ 93.8 $ 92.4 $ 132.6 $ (2.7 ) $ (28.0 ) $ 89.9 $ 105.8 Denominator: Weighted average shares outstanding for basic earnings per share 115,243,685 120,000,000 115,212,772 120,000,000 115,251,853 120,000,000 115,225,942 120,000,000 Basic earnings per share $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.02 ) $ (0.23 ) $ 0.78 $ 0.88 Diluted earnings per share Numerator: Net income available to Sirius Group common shareholders $ 6.0 $ 93.8 $ 92.4 $ 132.6 $ (2.7 ) $ (28.0 ) $ 89.9 $ 105.8 Add: Change in carrying value of Series B preference shares - - 9.2 - (5.3 ) — — — Net income available to Sirius Group common shareholders on a diluted basis $ 6.0 $ 93.8 $ 101.6 $ 132.6 $ (8.0 ) $ (28.0 ) $ 89.9 $ 105.8 Denominator: Weighted average shares outstanding for basic earnings per share 115,243,685 120,000,000 115,212,772 120,000,000 115,251,853 120,000,000 115,225,942 120,000,000 Add: Series B preference shares - - 11,901,670 - 11,901,670 — — — Add: Unvested performance share units and restricted share units 552,682 - 427,960 - — — 393,280 — Weighted average shares outstanding for diluted earnings per share(1) 115,796,367 120,000,000 127,542,402 120,000,000 127,153,523 120,000,000 115,619,222 120,000,000 Diluted earnings per share $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.06 ) $ (0.23 ) $ 0.78 $ 0.88 JuneSeptember 30, 2019, there were a total of 30,933,78119,537,270 potentially dilutive securities excluded from the calculation of Diluted earnings per share. For the sixnine months ended JuneSeptember 30, 2019, there were a total of 19,156,83331,045,660 potentially dilutive securities excluded from the calculation of Diluted earnings per share. As at JuneSeptember 30, 2018, there were no potentially dilutive securities excluded from the calculation of Diluted earnings per share.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedJuneSeptember 30, 2019 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 Equity method eligible unconsolidated entities, at fair value $ 156.3 $ 169.4 Other unconsolidated investments, at fair value(1) 223.6 195.6 Total Other long-term investments(2) $ 379.9 $ 365.0 (Millions) September 30, 2019 December 31, 2018 Equity method eligible unconsolidated entities, at fair value $ 143.5 $ 169.4 224.9 195.6 $ 368.4 $ 365.0 JuneSeptember 30, 2019 and December 31, 2018.2018JuneSeptember 30, 2019 and December 31, 2018 with ownership interest greater than 20%: Ownership interest at Investee June 30,
2019 December 31,
2018 Instrument Held BE Reinsurance Limited 25.0 % 25.0 % Common shares BioVentures Investors (Offshore) IV LP 73.0 % 73.0 % Units Camden Partners Strategic Fund V (Cayman), LP 39.4 % 36.4 % Units NEC Cypress Buyer LLC 13.3 % 13.3 % Units New Energy Capital Infrastructure Credit Fund LP(1) 18.3 % 22.9 % Units New Energy Capital Infrastructure Offshore Credit Fund LP(1) 12.2 % 54.9 % Units Scion G7, LP 28.3 % 28.8 % Units Tuckerman Capital V LP 48.3 % 47.6 % Units Tuckerman Capital V Co-Investment I LP 49.5 % 47.7 % Units Ownership interest at Investee September 30, 2019 December 31, 2018 Instrument Held BE Reinsurance Limited 25.0 % 25.0 % Common shares BioVentures Investors (Offshore) IV LP 73.0 % 73.0 % Units Camden Partners Strategic Fund V (Cayman), LP 36.3 % 36.4 % Units 13.3 % 13.3 % Units New Energy Capital Infrastructure Credit Fund LP 23.3 % 22.9 % Units New Energy Capital Infrastructure Offshore Credit Fund LP 56.2 % 54.9 % Units Scion G7, LP 28.8 % 28.8 % Units Tuckerman Capital V LP 48.2 % 47.6 % Units Tuckerman Capital V Co-Investment I LP 47.7 % 47.7 % Units New Energy Capital Infrastructure Credit Fund LP and New Energy Capital Infrastructure Offshore Credit Fund LP was greater than 20% at December 31, 2018 but wasNEC Cypress Buyer LLC is less than 20% at JuneSeptember 30, 2019 and December 31, 2018, but is included in the table for comparative purposes.UnauditedJuneSeptember 30, 2019 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Assets: Fixed maturity investments, trading at fair value $ 3.9 $ 4.0 $ 3.9 $ 4.0 Short-term investments, at fair value 0.5 0.3 0.5 0.3 Cash 0.1 0.2 0.1 0.2 Total investments 4.5 4.5 4.5 4.5 Insurance and reinsurance premiums receivable 0.2 0.1 (0.3 ) 0.1 Funds held by ceding companies 4.7 3.7 4.6 3.7 Deferred acquisition costs 0.3 5.2 0.3 5.2 Other assets - 0.9 0.1 0.9 Total assets $ 9.7 $ 14.4 $ 9.2 $ 14.4 Liabilities Loss and loss adjustment expense reserves $ 1.7 $ 4.6 $ 0.8 $ 4.6 Unearned insurance and reinsurance premiums 0.7 3.7 0.6 3.7 Other liabilities - - 0.1 — Total liabilities $ 2.4 $ 8.3 $ 1.5 $ 8.3 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited Maximum Exposure to Loss (Millions) Total VIE
Assets On-Balance
Sheet Off-Balance
Sheet Total June 30, 2019 Other long-term investments(1) $ 266.3 $ 120.2 $ 18.3 $ 138.5 Total at June 30, 2019 $ 266.3 $ 120.2 $ 18.3 $ 138.5 December 31, 2018 Other long-term investments(1) $ 209.1 $ 103.1 $ 32.0 $ 135.1 Total at December 31, 2018 $ 209.1 $ 103.1 $ 32.0 $ 135.1 Maximum Exposure to Loss (Millions) Total VIE Assets On-Balance Sheet Off-Balance Sheet Total September 30, 2019 $ 278.8 $ 114.2 $ 17.9 $ 132.1 Total at September 30, 2019 $ 278.8 $ 114.2 $ 17.9 $ 132.1 December 31, 2018 $ 209.1 $ 103.1 $ 32.0 $ 135.1 Total at December 31, 2018 $ 209.1 $ 103.1 $ 32.0 $ 135.1 sixnine months ended JuneSeptember 30, 2019, these contracts resulted in gross written premiums of $24.9$21.7 million and $49.0$70.7 million, respectively. During the three and sixnine months ended JuneSeptember 30, 2018, these contracts resulted in gross written premiums of $18.9$14.0 million and $38.2$52.2 million, respectively. As at JuneSeptember 30, 2019 and December 31, 2018, Sirius Group had total receivables due from affiliates of $23.2$24.1 million and $14.3 million, respectively. As at JuneSeptember 30, 2019 andSirius Group had total payables due to affiliates of $0.4 million. At December 31, 2018, Sirius Group did not have any payables due to affiliates.
LeasesSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditednoncancellablenoncancelable operating lease agreements. The average life of the office leases is 7 years and the equipment leases is 3 years.sixnine months ended JuneSeptember 30, 2019, Sirius Group recognized operating lease expense of $3.2$3.4 million and $5.8$9.3 million, respectively, including property taxes and routine maintenance expense as well as rental expenses related to short term leases. As at JuneSeptember 30, 2019, Sirius Group had $31.5$28.8 million operating lease right-of-use assets included in Other assets. As at JuneSeptember 30, 2019, Sirius Group had $33.5$30.7 million operating lease liability included in Other liabilities.JuneSeptember 30, 2019: (millions) (millions)Balance Sheet Classification JuneSeptember 30, 2019 Operating lease right-of-use assets Other assets $ 31.528.8Current lease liabilities Other liabilities $ 8.98.5Non-current lease liabilities Other liabilities $ 24.6 22.2 JuneSeptember 30, 2019: Weighted average lease term (years) as at JuneSeptember 30, 2019:2019 Leased offices 7 years 7.0 yearsLeased equipment 3 years 3.0 yearsWeighted average discount rate: Leased offices 3.7 3.7%%Leased equipment 3.4 3.4% %JuneSeptember 30, 2019: (Millions) Future Payments 2019 $ 5.0 2020 9.2 2021 7.9 2022 7.0 2023 4.3 2024 and after 2.8 Total future annual minimum rental payments as at June 30, 2019 36.2 Less: present value discount (2.7 ) Total lease liability as at June 30, 2019 $ 33.5 (Millions) Future Payments 2019 $ 2.5 2020 9.0 2021 7.8 2022 6.9 2023 4.3 2024 and after 2.8 Total future annual minimum rental payments as at September 30, 2019 33.3 Less: present value discount (2.6 ) Total lease liability as at September 30, 2019 $ 30.7 JuneSeptember 30, 2019, the Company's future operating lease obligations that have not yet commenced are immaterial.sixnine months ended JuneSeptember 30, 2019 and 2018 and the Company's consolidated financial condition, liquidity and capital resources as of JuneSeptember 30, 2019 and December 31, 2018. This discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes appearing in our Annual Report on Form 10-K for the year ended December 31, 2018 (our "2018 Annual Report"), filed with the Securities and Exchange Commission ("SEC") on March 14, 2019, and the Company's Unaudited Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP").••••JuneSeptember 30, 2019 and 2018secondthird quarter of 2019 with net income(loss) attributable to common shareholders of $7 million$(3) million. Basic earnings per share was $(0.02) and basicdiluted earnings per common share of $0.05.$(0.06). This compares to net income(loss) attributable to common shareholders of $98$(28) million and basic and diluted earnings per common share of $0.78$(0.23) for the secondthird quarter of 2018. The decreaseincrease was primarily due to ahigher net underwriting (loss) recorded for the second quarter of 2019 driven mainlyrealized and unrealized investment gains, partially offset by higher catastrophe losses and net unfavorable prior year loss reserve development. During the three months ended September 30, 2019, Sirius Group recorded catastrophe losses, net of reinsurance and reinstatement premiums, of $109 million compared to $77 million for the three months ended September 30, 2018. Catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2019 included $52 million for Typhoon Faxai and $44 million for Hurricane Dorian whereas catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2018 included $48 million for Typhoon Jebi, $9 million for Hurricane Florence, and $7 million for the Kerala Floods. Our Faxai loss estimate implies an industry loss of around $9 billion and our Dorian loss estimate is consistent with an industry loss of $8.5 billion. The three months ended JuneSeptember 30, 2019 included $64$6 million of net unfavorable prior year loss reserve development compared to $10 million of net favorable prior year loss reserve development for the three months ended JuneSeptember 30, 2018. During the three months ended June 30, 2019, Group recorded catastrophe losses of $8 million compared to $1 millionGroup's combined ratio was 123% for the three months ended JuneSeptember 30, 2018.Sirius Group's combined ratio was 105%2019 compared to 111% for the three months ended June 30, 2019 compared to 83% for the three months ended JuneSeptember 30, 2018. The increase in the combined ratio from the prior period was driven primarily by higher catastrophe losses, higher current accident year losses, and net unfavorable prior year loss reserve development. Sirius Group's combined ratio included 29 points of catastrophe losses for the three months ended September 30, 2019 compared to 24 points for the three months ended September 30, 2018. The combined ratio for the three months ended JuneSeptember 30, 2019 was impacted by 172 points of net unfavorable prior year loss reserve development compared to 3 points of net favorable prior year loss reserve development for the three months ended JuneSeptember 30, 2018. Sirius Group's combined ratio included 2 points of catastrophe losses for the three months ended June 30, 2019 compared to less than 1 point for the three months ended June 30, 2018.SixJuneSeptember 30, 2019 and 2018sixnine months of 2019 with net income attributable to common shareholders of $102$99 million and basic and diluted earnings per common share of $0.80.$0.78. This compares to net income attributable to common shareholders of $138$110 million and basic and diluted earnings per common share of $1.11$0.88 for the sixnine months ended JuneSeptember 30, 2018. The decrease was primarily due to net unfavorable prior year loss reserve development and higher catastrophe losses, partially offset by higher net realized and unrealized investment gains. The sixnine months ended JuneSeptember 30, 2019 included $81$87 million of net unfavorable prior year loss reserve development compared to $13$23 million of net favorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2018. During the sixnine months ended JuneSeptember 30, 2019, Sirius Group recorded catastrophe losses, net of $10reinsurance and reinstatement premiums, of $119 million compared to $3$80 million for the sixnine months ended JuneSeptember 30, 2018.99%107% for the sixnine months ended JuneSeptember 30, 2019 compared to 85%94% for the sixnine months ended JuneSeptember 30, 2018. The increase in the combined ratio was driven primarily by net unfavorable prior year loss reserve development.development, higher catastrophe losses, and higher current accident year losses in the Specialty & Casualty segment. The combined ratio for the sixnine months ended JuneSeptember 30, 2019 was impacted by 128 points of net unfavorable prior year loss reserve development compared to 23 points of net favorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2018. Sirius Group's combined ratio included 1 point11 points of catastrophe losses for each of the sixnine months ended JuneSeptember 30, 2019 andcompared to 9 points for the nine months ended September 30, 2018.sixnine months of 2019 with book value per common share of $15.47$15.11 compared to $14.80 as of December 31, 2018, an increase of 4.5%2.1% due to comprehensive income of $84$34 million recognized for the sixnine months ended JuneSeptember 30, 2019. Total common shareholders' equity at the end of the secondthird quarter of 2019 was $1,784$1,743 million compared to $1,704 million as of December 31, 2018.onOn EquityThe return on netonfor the period by beginning common shareholders' equity, was 0.4%(0.2)% for the three months ended JuneSeptember 30, 2019 compared to 5.0%(1.4)% for the three months ended JuneSeptember 30, 2018 due to a lower net income(loss) recognized.The return on net income attributable to common shareholders on beginning common shareholders' equity6.0%5.8% for each of the sixnine months ended JuneSeptember 30, 2019 compared to 7.2% for the six months ended June 30, 2018 due to lower net income recognized.sixnine months of 2019 with Adjusted book value per share, which assumes that the Series B preference shares will convert into common shares on a one-for-one basis, and also incorporates the impact of dilution arising from share-based compensation programs, of $15.87$15.47 compared to $15.24 as of December 31, 2018, an increase of 4.1%,1.5% due to the comprehensive income recognized. For Junethe nine months ended September 30, 2019, Adjusted book value and Adjusted book value per share include the earned effects of share-based compensation awards issued during 2019.JuneSeptember 30, 2019, Operating (loss) attributable to common shareholders was $(65) million compared to $(21) million for the three months ended September 30, 2018, primarily due to a higher net underwriting (loss) recognized in the third quarter of 2019.$(19)$(66) million compared to $41$50 million for the threenine months ended JuneSeptember 30, 2018, primarily due to the net underwriting (loss) recorded inrecognized for the second quarter of 2019.For the sixnine months ended JuneSeptember 30, 2019, Operating (loss) income attributable to common shareholders was $(1) million compared to $71 million for the six months ended June 30, 2018, primarily due to lower net underwriting gains and a loss on the change in fair value of weather derivatives.SixNine Months Ended JuneSeptember 30, 2019 and 2018 Three months ended
June 30, Six months ended
June 30, 2019 2018 2019 2018 Revenues $ 487.1 $ 505.0 $ 1,109.4 $ 1,120.2 $ 401.7 $ 320.3 $ 886.5 $ 789.7 $ 370.7 $ 308.9 $ 682.6 $ 593.4 24.4 19.2 44.5 30.0 15.6 7.8 24.6 4.1 15.5 24.7 89.5 40.7 (0.6 ) 25.6 4.5 22.1 15.4 55.6 35.0 79.0 441.0 441.8 880.7 769.3 Expenses 278.0 151.4 461.9 292.4 77.0 66.8 140.3 129.8 35.5 38.2 70.8 81.4 28.2 24.2 52.6 38.5 4.0 4.0 7.9 7.9 8.0 7.8 15.6 15.5 430.7 292.4 749.1 565.5 Pre-tax income 10.3 149.4 131.6 203.8 (2.1 ) (51.2 ) (19.3 ) (62.3 ) Net income 8.2 98.2 112.3 141.5 (0.8 ) (0.4 ) (1.2 ) (0.6 ) Net income attributable to Sirius Group 7.4 97.8 111.1 140.9 (0.8 ) - (9.2 ) - - - - (2.6 ) Net income attributable to Sirius Group's common shareholders $ 6.6 $ 97.8 101.9 $ 138.3 ��� Comprehensive income Net income $ 8.2 $ 98.2 $ 112.3 $ 141.5 Other comprehensive income (loss), net of tax Change in foreign currency translation, net of tax 1.1 (48.5 ) (26.7 ) (61.9 ) Total other comprehensive income (loss) 1.1 (48.5 ) (26.7 ) (61.9 ) Comprehensive income 9.3 49.7 85.6 79.6 Income attributable to non-controlling interests (0.8 ) (0.4 ) (1.2 ) (0.6 ) Comprehensive income attributable to Sirius Group $ 8.5 $ 49.3 $ 84.4 $ 79.0 Ratios: Loss ratio(1) 75.0 % 49.0 % 67.7 % 49.3 % Acquisition expense ratio(2) 20.8 % 21.6 % 20.6 % 21.9 % Other underwriting expense ratio(3) 9.6 % 12.4 % 10.4 % 13.7 % 105.4 % 83.0 % 98.7 % 84.9 % Selected financial data: Basic earnings per common share and common shares equivalent $ 0.05 $ 0.78 $ 0.80 $ 1.11 Diluted earnings per common share and common shares equivalent $ 0.05 $ 0.78 $ 0.80 $ 1.11 Basic weighted average number of common shares and common share equivalents outstanding 115,243,685 120,000,000 115,212,772 120,000,000 Diluted weighted average number of common shares and common share equivalents outstanding 115,796,367 120,000,000 127,542,402 120,000,000 Return on equity(5) 0.4 % 5.0 % 6.0 % 7.2 % Operating (loss) income attributable to common shareholders(6) $ (19.4 ) $ 40.5 $ (0.5 ) $ 71.4 Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Revenues Gross written premiums $ 413.7 $ 398.0 $ 1,523.1 $ 1,518.2 Net written premiums $ 322.3 $ 305.7 $ 1,208.8 $ 1,095.4 Net earned insurance and reinsurance premiums $ 374.2 $ 321.1 $ 1,056.8 $ 914.5 Net investment income 22.8 21.8 67.3 51.8 Net realized investment gains 15.3 3.9 39.9 8.0 Net unrealized investment gains (losses) 53.9 (11.7 ) 143.4 29.0 Net foreign exchange gains (losses) 4.9 (0.4 ) 9.4 21.7 Other revenue 16.3 17.0 51.3 96.0 Total revenues 487.4 351.7 1,368.1 1,121.0 Expenses Loss and loss adjustment expenses ("LAE") 348.6 260.4 810.5 552.8 Insurance and reinsurance acquisition expenses 75.1 59.2 215.4 189.0 Other underwriting expenses 35.4 35.7 106.2 117.1 General and administrative expenses 28.0 19.5 80.6 58.0 Intangible asset amortization expenses 3.9 3.9 11.8 11.8 Interest expense on debt 7.7 7.6 23.3 23.1 Total expenses 498.7 386.3 1,247.8 951.8 Pre-tax (loss) income (11.3 ) (34.6 ) 120.3 169.2 Income tax benefit (expense) 3.7 6.9 (15.6 ) (55.4 ) Net (loss) income (7.6 ) (27.7 ) 104.7 113.8 Income attributable to non-controlling interests (0.4 ) (0.3 ) (1.6 ) (0.9 ) Net (loss) income attributable to Sirius Group (8.0 ) (28.0 ) 103.1 112.9 Change in carrying value of Series B preference shares 5.3 — (3.9 ) — Accrued dividends on Series A redeemable preference shares — — — (2.6 ) Net (loss) income attributable to Sirius Group's common shareholders $ (2.7 ) $ (28.0 ) $ 99.2 $ 110.3 Comprehensive (loss) income Net (loss) income $ (7.6 ) $ (27.7 ) $ 104.7 $ 113.8 Other comprehensive (loss) income, net of tax Change in foreign currency translation, net of tax (42.3 ) 4.7 (69.0 ) (57.2 ) Total other comprehensive (loss) income (42.3 ) 4.7 (69.0 ) (57.2 ) Comprehensive (loss) income (49.9 ) (23.0 ) 35.7 56.6 Income attributable to non-controlling interests (0.4 ) (0.3 ) (1.6 ) (0.9 ) Comprehensive (loss) income attributable to Sirius Group $ (50.3 ) $ (23.3 ) $ 34.1 $ 55.7 Ratios: 93.2 % 81.1 % 76.7 % 60.4 % 20.1 % 18.4 % 20.4 % 20.7 % 9.5 % 11.1 % 10.0 % 12.8 % 122.8 % 110.6 % 107.1 % 93.9 % Selected financial data: Basic earnings per common share and common shares equivalent $ (0.02 ) $ (0.23 ) $ 0.78 $ 0.88 Diluted earnings per common share and common shares equivalent $ (0.06 ) $ (0.23 ) $ 0.78 $ 0.88 Basic weighted average number of common shares and common share equivalents outstanding 115,251,853 120,000,000 115,225,942 120,000,000 Diluted weighted average number of common shares and common share equivalents outstanding 127,153,523 120,000,000 115,619,222 120,000,000 (0.2 )% (1.4 )% 5.8 % 5.8 % $ (65.4 ) $ (21.4 ) $ (65.9 ) $ 50.0 netNet (loss) income attributable to Sirius Group's common shareholders for the period by the beginning common shareholders' equity. As of
June 30, 2019 As of
December 31, 2018 Selected balance sheet data: Common shares outstanding 115,296,918 115,151,251 Series B preference shares outstanding 11,901,670 11,901,670 Earned share-based compensation awards, excluding stock options 374,912 - Earned portion of Stock option awards issued 152,772 - Adjusted shares outstanding(1) 127,726,272 127,052,921
Total common shareholders' equity
$
1,784.1
$
1,704.5
Series B preference shares 241.3 232.2 Earned portion of future proceeds from stock option awards 1.9 - Adjusted book value(1) $ 2,027.3 $ 1,936.7
Book value per common share
$
15.47
$
14.80
Adjusted book value per share(1) $ 15.87 $ 15.24 Selected balance sheet data: $ 15.11 $ 14.80 $ 15.47 $ 15.24 $ 11.10 $ 10.76 AdjustedBook value per common share is calculated by dividing Total common shareholders' equity by the total number of Common shares outstanding, outstanding.share outstanding, Adjusted book value per share and Adjusted tangible book value per share.SixNine Months Ended JuneSeptember 30, 2019 and 2018JuneSeptember 30, 2019 was $487were $414 million, a decreasean increase of $18$16 million or 4% compared to gross written premiums of $505$398 million for the three months ended JuneSeptember 30, 2018, with Specialty & Casualty up 59%57%, Global A&H up 37%17%, and Global Property down 27%25%. Absent the effect of a single fronting arrangement within the Global Property segment, gross written premiums increased 20%9% compared to the prior period. See "Results of Reportable Segments" below.sixnine months ended JuneSeptember 30, 2019 was $1,109were $1,523 million, a decreasean increase of $11$5 million or 1%0.3% compared to gross written premiums of $1,120$1,518 million for the sixnine months ended JuneSeptember 30, 2018, with Global A&H up 25%, Specialty & Casualty up 24%34%, Global A&H up 23%, and Global Property down 16%18%. Absent the effect of a single fronting arrangement within the Global Property segment, gross written premiums increased 7% compared to the prior period. See "Results of Reportable Segments" below.JuneSeptember 30, 2019 was $402were $322 million, an increase of $82$16 million or 26%5% compared to net written premiums of $320$306 million for the three months ended JuneSeptember 30, 2018, with Specialty & Casualty up 62%55%, Global A&H up 46%19%, and Global Property up 8%down 28%. See "Results of Reportable Segments" below.sixnine months ended JuneSeptember 30, 2019 was $887were $1,209 million, an increase of $97$114 million or 12%10% compared to net written premiums of $790$1,095 million for the sixnine months ended JuneSeptember 30, 2018, with Global A&H up 29%, Specialty & Casualty up 36% Global A&H up 26%, and Global Property up 2%down 6%. See "Results of Reportable Segments" below.JuneSeptember 30, 2019 was $371were $374 million, an increase of $62$53 million or 20%17% compared to net earned premiums of $309$321 million for the three months ended JuneSeptember 30, 2018, with Specialty & Casualty up 55%71%, Global A&H up 47%28% and Global Property down 2%8%. See "Results of Reportable Segments" below.sixnine months ended JuneSeptember 30, 2019 was $683were $1,057 million, an increase of $90$142 million or 15%16% compared to net earned premiums of $593$915 million for the sixnine months ended JuneSeptember 30, 2018, with Specialty & Casualty up 48% and56%, Global A&H up 27%28%, and Global Property down 3%. See "Results of Reportable Segments" below. gains – Net investment income increased 26%5% to $24$23 million for the three months ended JuneSeptember 30, 2019 from $19$22 million for the three months ended JuneSeptember 30, 2018. Sirius Group reported net realized investment gains of $15 million for the three months ended September 30, 2019, which included $14 million of net realized foreign currency gains, compared to net realized investment gains of $4 million for the three months ended September 30, 2018, which included $5 million of net realized foreign currency gains. Net unrealized investment gains were $54 million for the three months ended September 30, 2019, which included $34 million of net unrealized foreign currency gains, compared to net unrealized investment (losses) of $(12) million for the three months ended September 30, 2018, which included $(6) million of net unrealized foreign currency losses. See "Summary of Investment Results" below. Additionally, Sirius Group recorded $5 million of non-investment related foreign exchange gains for the three months ended September 30, 2019 compared to less than $(1) million of non-investment related foreign exchange (losses) for the three months ended September 30, 2018. Included in the amount for the three months ended September 30, 2019 is $16 million of favorable currency movement compared to $(2) million of unfavorable currency movement for the three months ended September 30, 2018 on the 2017 SEK Subordinated Notes. See "Foreign Currency Translation" below.$16$40 million for the threenine months ended JuneSeptember 30, 2019, which included $10$35 million of net realized foreign currency gains, compared to net realized investment gains of $8 million for the threenine months ended JuneSeptember 30, 2018, which included $7$11 million of net realized foreign currency gains. Net unrealized investment gains were $16$143 million for the threenine months ended JuneSeptember 30, 2019, which included $(7) million of net unrealized foreign currency (losses), compared to net unrealized investment gains of $25 million for the three months ended June 30, 2018, which included $30 million of net unrealized foreign currency gains. See "Summary of Investment Results" below. Additionally, Sirius Group recorded $(1) million of non-investment related foreign exchange (losses) for the three months ended June 30, 2019 compared to $26 million of non-investment related foreign exchange gains for the three months ended June 30, 2018. Included in the amount for the three months ended June 30, 2019 is less than $1 million of favorable currency movement compared to $28 million of favorable currency movement for the three months ended June 30, 2018 on the 2017 SEK Subordinated Notes. See "Foreign Currency Translation" below.Net investment income increased 50% to $45 million for the six months ended June 30, 2019 from $30 million for the six months ended June 30, 2018 due primarily to a higher interest rate environment. Sirius Group reported net realized investment gains of $25 million for the six months ended June 30, 2019, which included $21 million of net realized foreign currency gains, compared to net realized investment gains of $4 million for the six months ended June 30, 2018, which included $6 million of net realized foreign currency gains. Net unrealized investment gains were $90 million for the six months ended June 30, 2019, which included $18$52 million of net unrealized foreign currency gains, compared to net unrealized investment gains of $41$29 million for the sixnine months ended JuneSeptember 30, 2018, which included $49$43 million of net unrealized foreign currency gains. See"Summary of Investment Results" below. Additionally, Sirius Group recorded $5$9 million of non-investment related foreign exchange gains for the sixnine months ended JuneSeptember 30, 2019 compared to $22 million of non-investment related foreign exchange gains for the sixnine months ended JuneSeptember 30, 2018. Included in the sixnine months ended JuneSeptember 30, 2019 amount is $11$27 million of favorable currency movement compared to $28$26 million of favorable foreign currency movement for the sixnine months ended JuneSeptember 30, 2018 on the 2017 SEK Subordinated Notes. See "Foreign Currency Translation" below.$15$16 million for the three months ended JuneSeptember 30, 2019 from $56$17 million for the three months ended JuneSeptember 30, 2018.Other revenue decreased to $35 million for the six months ended June 30, 2019 from $79 million for the six months ended June 30, 2018. The decrease in other revenue was primarily attributable to management's estimate of a right of indemnification against a third party in connection with an uncertain tax position that was recorded in other revenue in the second quarter of 2018.84%34% to $278$349 million for the three months ended JuneSeptember 30, 2019 from $151$260 million for the three months ended JuneSeptember 30, 2018 primarily due to higher catastrophe losses, net unfavorable prior year loss reserve development, and increased net earned insurance and reinsurance premiums for the three months ended September 30, 2019. See "Results of Reportable Segments" below.threenine months ended JuneSeptember 30, 2019. See "Results of Reportable Segments" below.Loss and loss adjustment expenses increased 58% to $462 million for the six months ended June 30, 2019 from $292 million for the six months ended June 30, 2018, primarily due to net unfavorable prior year loss reserve development, higher catastrophe losses, and increased net earned insurance and reinsurance premiums for the six months ended June 30, 2019. See "Results of Reportable Segments" below.15%27% to $77$75 million for the three months ended JuneSeptember 30, 2019 from $67$59 million for the three months ended JuneSeptember 30, 2018 primarily due to an increase in net earned insurance and reinsurance premiums for Specialty & Casualty and Global A&H for the three months ended September 30, 2019. See "Results of Reportable Segments" below.threenine months ended JuneSeptember 30, 2019. See "Results of Reportable Segments" below.Insurance and reinsurance acquisition expenses increased 8% to $140 million for the six months ended June 30, 2019 from $130 million for the six months ended June 30, 2018, due to an increase in net earned insurance and reinsurance premiums and higher acquisition expenses for Specialty & Casualty and Global A&H partially offset by lower acquisition expenses for Global Property, primarily due to business mix, for the six months ended June 30, 2019. See "Results of Reportable Segments" below.5%3% to $35 million for the three months ended September 30, 2019 from $36 million for the three months ended June 30, 2019 from $38 million for the three months ended JuneSeptember 30, 2018. See "Results of Reportable Segments" below.12%9% to $71$106 million for the sixnine months ended JuneSeptember 30, 2019 from $81$117 million for the sixnine months ended JuneSeptember 30, 2018 primarily due to lower variable incentive compensation expense. In addition, higher operating expenses were included in other underwriting expense for the MGUs for the six months ended June 30, 2018, representing costs associated with the support of the Global A&H underwriting team. See "Results of Reportable Segments" below.17%40% to $28 million for the three months ended JuneSeptember 30, 2019 from $24$20 million for the three months ended JuneSeptember 30, 2018 primarily due to an increase in professional fees.General and administrative expenses increased 36% to $53 million for the six months ended June 30, 2019 from $39 million for the six months ended June 30, 2018, primarily due to an increase in expenses related to IMG and professional fees.sixnine months ended JuneSeptember 30, 2019 and 2018, respectively, follows: For the Three Months Ended
June 30, For the Six Months Ended
June 30, (Millions) 2019 2018 2019 2018 Pre-tax investment results Net investment income $ 24.4 $ 19.2 $ 44.5 $ 30.0 Net realized and unrealized investment gains(1) 31.1 43.8 114.1 58.5 Change in foreign currency translation on investments recognized through other comprehensive income(2) (0.1 ) (78.1 ) (41.8 ) (99.0 ) Net pre-tax investment gains (losses) $ 55.4 $ (15.1 ) $ 116.8 $ (10.5 ) Three months ended September 30, Nine months ended September 30, (Millions) 2019 2018 2019 2018 Pre-tax investment results Net investment income $ 22.8 $ 21.8 $ 67.3 $ 51.8 69.2 (11.5 ) 183.3 47.0 (67.8 ) 6.4 (109.6 ) (92.6 ) Net pre-tax investment gains $ 24.2 $ 16.7 $ 141.0 $ 6.2 JuneSeptember 30, 2019 and 2018 of $2.4$47.9 million and $48.2$(4.5) million, respectively, and for the sixnine months ended JuneSeptember 30, 2019 and 2018 of $38.3$86.2 million and $68.3$63.8 million, respectively. gains for the three months ended JuneSeptember 30, 2019 and 2018 of $(0.6)$4.9 million and $29.6$(1.7) million, respectively, and for the sixnine months ended JuneSeptember 30, 2019 and 2018 of $4.5$9.4 million and $37.1$35.4 million, respectively. For the Three Months Ended
June 30, For the Six Months Ended
June 30, 2019 2018 2019 2018 Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Performance metrics Total fixed income investment returns: 1.4 % (0.4 )% 2.4 % (0.5 )% 0.4 % 0.6 % 2.8 % 0.2 % 1.3 % 0.4 % 2.5 % 0.4 % 0.8 % 0.5 % 3.4 % 1.0 % 1.5 % 0.3 % 2.7 % 0.1 % 0.7 % 0.3 % 3.4 % 0.4 % 1.1 % 0.6 % 2.0 % 1.1 % 0.6 % (0.5 )% 2.6 % 0.6 % 0.1 % (0.1 )% 1.4 % 0.1 % 0.3 % 0.1 % 1.8 % 0.4 % Total equity securities and other long-term investments returns: 3.0 % (0.5 )% 9.0 % 1.6 % 2.4 % 0.5 % 11.7 % 2.1 % 2.7 % 1.0 % 8.5 % 2.7 % 2.8 % 0.5 % 11.5 % 3.3 % 4.3 % 3.4 % 18.5 % 2.6 % 1.7 % 7.7 % 20.6 % 10.6 % Total consolidated portfolio 1.7 % (0.4 )% 3.6 % (0.2 )% 0.8 % 0.6 % 4.4 % 0.4 % 1.5 % 0.5 % 3.6 % 0.7 % 1.2 % 0.5 % 4.8 % 1.3 % sixnine months ended JuneSeptember 30, 2019 and 20181.7%0.8% for the three months ended JuneSeptember 30, 2019 compared to (0.4)%0.6% for the three months ended JuneSeptember 30, 2018. The result for the three months ended JuneSeptember 30, 2019 included foreign currency (losses) on investments, which decreased the total pre-tax return by (0.4)%. The 2018 result included foreign currency gains on investments, which increased the total pre-tax return by 0.2%. The 2018 result included foreign currency losses on investments, which decreased the total pre-tax return by (0.9)%0.1%. The currency gains(loss) for the secondthird quarter of 2019 werewas generated mainly from our Swedish kronor, Euro, and Canadian dollar and Israeli shekel holdings as these currencies strengthened 1.4%weakened by (5.7)%, 1.9%(4.4)%, and 1.8%(1.1)%, respectively, versus the U.S. dollar. The currency lossesgains for the secondthird quarter of 2018 were generated mainly from our Swedish kronor Euro, and Israeli shekel holdings as these currencies weakened 7.2%this currency strengthened 0.5%, 5.7%, and 4.3%, respectively, versus the U.S. dollar.sixnine months ended JuneSeptember 30, 2019, Sirius Group's pre-tax total gross return on invested assets was 3.6%4.4% versus (0.2)%0.4% for the same period in 2018. Currency did not impact our six monthreduced the nine months ended September 30, 2019 investmentsinvestment result while theby (0.4)%. The investment result for the sixnine months ended JuneSeptember 30, 2018 was adversely impacted by the strengthening of the U.S. dollar which reduced our return by (0.9)%.$24$23 million for the three months ended JuneSeptember 30, 2019 compared to $19$22 million for the three months ended JuneSeptember 30, 2018. Net investment income was $45$67 million for the sixnine months ended JuneSeptember 30, 2019 compared to $30$52 million for the sixnine months ended JuneSeptember 30, 2018. The increase in both periodsfor the nine months ended September 30, 2019 was driven by higher earned income from our equityfixed income securities and other long term investments; in addition, the increase for the sixnine months ended JuneSeptember 30, 2019 was driven by a higher interest rate environment at the time of reinvestment.$29$21 million for the three months ended JuneSeptember 30, 2019 compared to $(4)$(7) million for the three months ended JuneSeptember 30, 2018. For the sixnine months ended JuneSeptember 30, 2019, net realized and unrealized investment gains (losses), excluding foreign currency, were $76$97 million compared to $(10)$(17) million for the sixnine months ended JuneSeptember 30, 2018. The increase in both periods was driven by unrealized investment gains consistent with overall market performance.JuneSeptember 30, 2019, the fixed income portfolio duration was approximately 1.51.6 years compared to 1.7 years as of December 31, 2018. The average credit quality of the fixed income portfolio, including short term investments, was AA at JuneSeptember 30, 2019 which is unchanged from December 31, 2018. As of JuneSeptember 30, 2019 and December 31, 2018, Sirius Group held $357$324 million and $361 million, respectively, of non-U.S. denominated fixed income securities.1.4%0.4% on a U.S. dollar basis and 1.3%0.8% in local currencies for the three months ended JuneSeptember 30, 2019. Our U.S. portfolio returned 1.4%0.9% versus the Barclays 1-3 Year Aggregate ("BarcAg1-3") of 1.5%0.7%. Our non-U.S. portfolio returned 0.3%0.1% in originallocal currencies, which compares to the OMX Stockholm OMRX Total Return Bond Index ("OMRX") of 1.1%0.6% and the Bloomberg Barclays Pan-European Aggregate: Corp 1-3 Years Total Return ("BarcAg1-3 EUR") of 0.1%0.3%. The fixed income portfolio lost (0.4)%returned 0.6% on a U.S. dollar basis and returned 0.4%0.5% in local currencies for the three months ended JuneSeptember 30, 2018. Our U.S. portfolio returned 0.3%0.6% versus the BarcAg1-3 of 0.3%. Our non-U.S. portfolio returned 0.6%0.0% in originallocal currencies which compares to the OMRX of 0.6%(0.5)%.2.4%2.8% on a U.S. dollar basis and 2.5%3.4% in local currencies for the sixnine months ended JuneSeptember 30, 2019. Our U.S. portfolio returned 2.8%3.7% versus the BarcAg1-3 of 2.7%3.4%. Our non-U.S. portfolio returned 0.7%0.9% in originallocal currencies which compares to the OMRX of 2.0%2.6% and the BarcAg1-3 EUR of 1.4%1.8%. For the three and nine months ended September 30, 2019, the duration of the comparative indices was longer versus our portfolio. The lower duration of our portfolio adversely impacted our return versus the indices due to the decreasing interest rate environment. The return for the sixnine months ended JuneSeptember 30, 2018 was (0.5)%0.2% on a U.S. dollar basis and 0.4%1.0% in originallocal currencies. Our U.S. portfolio returned 0.3%0.9% versus the BarcAg1-3 of 0.1%0.4%. The outperformance was due to a lower concentration in treasuries in our portfolio compared to the BarcAg1-3. Our non-U.S. portfolio returned 0.8% in originallocal currencies which compares to the OMRX of 1.1%0.6%, due to a market driven negative return inmarket-driven strong performance of our euro denominatedCanadian dollar fixed income investments.JuneSeptember 30, 2019, the equity and other long-term investments portfolio included $475$491 million of U.S. dollar denominated securities compared to $439 million of U.S. dollar denominated securities as of December 31, 2018. As of JuneSeptember 30, 2019 and December 31, 2018, Sirius Group held $187$183 million and $149 million, respectively, of non-U.S. denominated equity and other long-term investments.JuneSeptember 30, 2019, the equity portfolio gained 3.0%2.4% on a U.S. dollar basis and gained 2.7%2.8% in local currencies. The S&P 500 gained 4.3%1.7% for the same period. For the three months ended JuneSeptember 30, 2018, the equity portfolio lost (0.5)%gained 0.5% on a U.S. dollar basis but gained 1.0%and in local currencies. The S&P 500 gained 3.4%7.7% for the same period.sixnine months ended JuneSeptember 30, 2019, the equity portfolio returned 9.0%11.7% on a U.S. dollar basis and 8.5%11.5% in originallocal currencies versus the S&P 500 of 18.5%20.6%. Performance lagged the S&P 500 due to the market neutral strategy of a large portion of our equity and other long-term investments portfolio. For the sixnine months ended JuneSeptember 30, 2018, the equity portfolio returned 1.6%2.1% on a U.S. dollar basis and 2.7%3.3% in local currencies versus the S&P 500 of 2.6%10.6%.JuneSeptember 30, 2019 and December 31, 2018, Sirius Group had net unrealized foreign currency translation (losses) of $(229)$(271) million and $(202) million, respectively, recorded in Accumulated other comprehensive (loss) on its Consolidated Balance Sheets. gains.JuneSeptember 30, 2019 and December 31, 2018: Currency Closing Rate
June 30, 2019 Closing Rate
December 31, 2018 Swedish kronor 9.2838 8.9397 9.8155 8.9397 British pound 0.7866 0.7850 0.8121 0.7850 Euro 0.8786 0.8734 0.9173 0.8734 Canadian dollar 1.3097 1.3614 1.3243 1.3614 SEK.Swedish kronor. When Sirius International prepares its stand-alone GAAP financial statements, it remeasures its U.S. dollar-denominated investments to SEKthe Swedish kronor and recognizes the related foreign currency remeasurement gains or losses through pre-tax income. When Sirius Group consolidates Sirius International, it translates Sirius International's stand-alone GAAP financial statements to U.S. dollars and recognizes the related foreign currency translation gains or losses through other comprehensive income (loss). Since Sirius Group reports its financial statements in U.S. dollars, there is no net effect to book value per common share or to investment returns from foreign currency translation on its U.S. dollar-denominated investments at Sirius International. However, net realized and unrealized investment gains (losses), other revenues, net income (loss), earnings per share, and other comprehensive income (loss) can be significantly affected during periods of high volatility in the foreign exchange rate between the U.S. dollar and other currencies, especially the SEK.Swedish kronor.sixnine months ended JuneSeptember 30, 2019 and 2018 follows: Three Months
Ended June 30, Six Months
Ended June 30, 2019 2018 2019 2018 $ 9.6 $ 7.1 $ 20.5 $ 6.0 (7.2 ) 29.7 17.8 48.6 2.4 36.8 38.3 54.6 0.9 21.5 5.0 19.4 1.4 4.3 2.4 3.0 (3.0 ) - (3.0 ) - - (0.1 ) - (0.2 ) 1.1 - 0.9 (0.5 ) 2.8 62.5 43.6 76.3 (0.1 ) (78.6 ) (41.8 ) (99.0 ) 1.2 30.1 15.1 37.1 1.1 (48.5 ) (26.7 ) (61.9 ) $ 3.9 $ 14.0 $ 16.9 $ 14.4 (Millions) Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 $ 14.0 $ 4.7 $ 34.5 $ 10.7 33.9 (5.5 ) 51.7 43.1 Net realized and unrealized investment gains (losses) - foreign currency 47.9 (0.8 ) 86.2 53.8 9.0 (0.4 ) 14.0 19.0 3.7 (0.1 ) 6.1 2.9 (7.8 ) — (10.8 ) — — — — (0.2 ) Income tax (expense) benefit (0.8 ) 0.1 0.1 (0.4 ) Total foreign currency remeasurement gains (losses) recognized through net (loss) income, after tax 52.0 (1.2 ) 95.6 75.1 Change in foreign currency translation on investments recognized through other comprehensive income, after tax (67.8 ) 6.4 (109.6 ) (92.6 ) Change in foreign currency translation on non - investment net liabilities recognized through other comprehensive income, after tax 25.5 (1.7 ) 40.6 35.4 Total foreign currency translation (losses) gains recognized through other comprehensive income, after tax (42.3 ) 4.7 (69.0 ) (57.2 ) Total foreign currency gains recognized in comprehensive (loss) income, after tax $ 9.7 $ 3.5 $ 26.6 $ 17.9 gains on the Consolidated Statements of IncomeJuneSeptember 30, 2019, the following currencies represented the largest exposure to foreign currency risk as a percentage of Sirius Group's common shareholders' equity: the Swedish kronor 5% (short) and the Israeli shekel 1% (long). As of December 31, 2018, the following currencies represented the largest exposure to foreign currency risk as a percentage of Sirius Group's common shareholders' equity: the Swedish kronor 13% (short) and the Israeli shekel 4% (long).JuneSeptember 30, 2019 and December 31, 2018, Sirius Group's investment portfolio included approximately $487$473 million and $468 million of non-U.S. dollar denominated investments, most of which is denominated in Swedish kronor, Euro, Canadian dollar, Israeli shekel, Canadian dollar, and British pound. The investment values in this portfolio are impacted by changes in the exchange rate between the U.S. dollar and those currencies.JuneSeptember 30, 2019 and December 31, 2018: Carrying Value at
June 30, 2019 Carrying Value at
December 31, 2018 Currency (Millions) Local Currency USD Local Currency USD Carrying Value at September 30, 2019 Carrying Value at December 31, 2018 Local Currency USD Local Currency USD U.S. Dollar 2,979.3 $ 2,979.3 2,941.6 $ 2,941.6 3,040.4 $ 3,040.4 2,941.6 $ 2,941.6 Swedish kronor 1,473.3 158.7 1,348.1 150.8 1,498.8 152.7 1,348.1 150.8 Euro 87.9 100.0 105.2 120.5 82.5 89.9 105.2 120.5 Canadian dollar 113.4 85.6 84.0 61.7 Israeli shekel 273.2 76.5 232.7 62.1 279.3 80.3 232.7 62.1 Canadian dollar 88.5 67.6 84.0 61.7 British pound 6.1 7.8 8.2 10.4 8.4 10.3 8.2 10.4 Other - 76.4 - 62.6 — 54.2 — 62.6 Total investments $ 3,466.3 $ 3,409.7 $ 3,513.4 $ 3,409.7 Three months ended
June 30, Six months ended
June 30, Global Property(Millions) 2019 2018 2019 2018 Gross written premiums $ 236.2 $ 325.4 $ 566.9 $ 672.0 Net written premiums 191.6 177.0 432.9 424.2 Net earned insurance and reinsurance premiums 164.3 167.5 304.0 303.6 Loss and allocated LAE (131.3 ) (68.2 ) (193.9 ) (138.6 ) Insurance and reinsurance acquisition expenses (27.2 ) (34.1 ) (53.0 ) (63.4 ) $ 5.8 $ 65.2 $ 57.1 $ 101.6 Unallocated LAE (2.6 ) (2.5 ) (4.7 ) (4.4 ) Other underwriting expenses (17.0 ) (18.1 ) (33.2 ) (35.5 ) Underwriting (loss) income $ (13.8 ) $ 44.6 $ 19.2 $ 61.7 Ratios: Loss ratio(1) 81.5 % 42.2 % 65.3 % 47.1 % Acquisition expense ratio(2) 16.6 % 20.4 % 17.4 % 20.9 % Other underwriting expense ratio(3) 10.3 % 10.8 % 10.9 % 11.7 % Combined ratio(4) 108.4 % 73.4 % 93.6 % 79.7 % Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Gross written premiums $ 153.6 $ 203.7 $ 720.5 $ 875.7 Net written premiums 103.7 144.9 536.6 569.1 Net earned insurance and reinsurance premiums 159.9 172.7 463.9 476.3 Loss and allocated LAE (184.4 ) (173.2 ) (378.3 ) (311.8 ) Insurance and reinsurance acquisition expenses (29.2 ) (30.1 ) (82.2 ) (93.5 ) Technical (loss) profit $ (53.7 ) $ (30.6 ) $ 3.4 $ 71.0 Unallocated LAE (5.5 ) (3.3 ) (10.2 ) (7.7 ) Other underwriting expenses (14.7 ) (17.5 ) (47.9 ) (53.0 ) Underwriting (loss) income $ (73.9 ) $ (51.4 ) $ (54.7 ) $ 10.3 Ratios: 118.8 % 102.2 % 83.7 % 67.1 % 18.3 % 17.4 % 17.7 % 19.6 % 9.2 % 10.1 % 10.3 % 11.1 % 146.3 % 129.7 % 111.7 % 97.8 % JuneSeptember 30, 2019 and 201827%25% to $236$154 million for the three months ended JuneSeptember 30, 2019 from $325$204 million for the three months ended JuneSeptember 30, 2018, due to a decreasedecreases in Other Property ($11836 million) and Property Catastrophe Excess ($13 million). Absent the effect of a single fronting arrangement, gross written premiums increased 3%decreased 21% compared to the prior period. This was due to an increase in Property Catastrophe Excess ($33 million), partially offsetmainly driven by lower Other Property and Property Catastrophe Excess writings due to reduced treaty participations and non-renewals of certain accounts. Net written premiums increased 8%decreased 28% to $192$104 million for the three months ended JuneSeptember 30, 2019 from $177$145 million for the three months ended JuneSeptember 30, 2018 due primarily to an increase in Property Catastrophe Excess ($38 million), partially offset by a decrease in Other Property ($19 million).the same reasons mentioned above. The Other Property fronting arrangement did not impact Global Property's net written or earned insurance and reinsurance premiums for either the 2019 or 2018 periods.108%146% for the three months ended JuneSeptember 30, 2019 compared to 73%130% for the three months ended JuneSeptember 30, 2018. The increase in the combined ratio was driven by higher net unfavorable prior year loss reserve development and higher catastrophe losses, partially offset by lower net commissions, primarily due to business mix.$(14)$(74) million for the three months ended JuneSeptember 30, 2019 compared to an underwriting income(loss) of $45$(51) million for the three months ended June 30, 2018. Net unfavorable prior year loss reserve development was $56 million (34 points) primarily related to Property Catastrophe Excess ($39 million) and Other Property ($14 million) for the three months ended June 30, 2019. The unfavorable loss reserve development in Global Property was driven by higher losses from recent accident years, including $46 million from Typhoon Jebi. Net unfavorable prior year loss reserve development was $1 million (less than 1 point) for the three months ended JuneSeptember 30, 2018. The three months ended JuneSeptember 30, 2019 included catastrophe losses, net of reinsurance and reinstatement premiums, of $7$109 million (4(68 points) principally from Typhoon Faxai ($52 million) and Hurricane Dorian ($44 million) compared to $76 million (44 points) for the three months ended September 30, 2018 principally from Typhoon Jebi ($48 million), Hurricane Florence ($9 million), the Kerala Floods ($7 million) and other catastrophic events. Net unfavorable prior year loss reserve development was $1 million (less than 1(1 point) for the three months ended JuneSeptember 30, 2018.2019 as net unfavorable prior year loss reserve development in Other Property ($14 million) and Agriculture ($1 million) was partially offset by net favorable prior year loss reserve development in Property Catastrophe lossesExcess ($14 million). Net unfavorable prior year loss reserve development was $11 million (6 points) for the three months ended JuneSeptember 30, 2019 were2018 primarily from Cyclone Fanirelated to Other Property ($37 million) and Property Catastrophe Excess ($4 million), resulting from higher than expected loss reporting from recent accident years, including $6 million of increases from natural catastrophes, including the 2017 North Queensland Monsoon ($1 million), and Windstorm Alfrida ($1 million).SixAmerican natural catastrophes.JuneSeptember 30, 2019 and 201816%18% to $567$721 million for the sixnine months ended JuneSeptember 30, 2019 from $672$876 million for the sixnine months ended JuneSeptember 30, 2018. Absent the effect of a single fronting arrangement, gross written premiums decreased 5%9% compared to the prior period. This was due to a decrease in Other Property primarily driven by reduced treaty participations and non-renewals of certain accounts, partially offset by an increase in Property Catastrophe Excess ($3218 million). Net written premiums increased 2%decreased 6% to $433$537 million for the sixnine months ended JuneSeptember 30, 2019 from $424$569 million for the sixnine months ended JuneSeptember 30, 2018 due primarily to a decrease in Other Property ($66 million), partially offset by an increase in Property Catastrophe Excess ($55 million), partially offset by a decrease in Other Property ($4734 million). The Other Property fronting arrangement did not impact Global Property's net written or earned insurance and reinsurance premiums for either the 2019 or 2018 periods.94%112% for the sixnine months ended JuneSeptember 30, 2019 compared to 80%98% for the sixnine months ended JuneSeptember 30, 2018. The increase in the combined ratio was driven by higher net unfavorable prior year loss reserve development and higher catastrophe losses, partially offset by lower net commissions, primarily due to business mix.losses.income(loss) of $19 million and $62$(55) million for the sixnine months ended JuneSeptember 30, 2019 compared to $10 million of underwriting income for the nine months ended September 30, 2018. The nine months ended September 30, 2019 included catastrophe losses, net of reinsurance and 2018, respectively.reinstatement premiums, of $118 million (25 points) compared to $79 million (17 points) for the nine months ended September 30, 2018. Catastrophe losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2019 were primarily from Typhoon Faxai ($52 million) and Hurricane Dorian ($44 million). Net unfavorable prior year loss reserve development was $67$68 million (22(15 points) primarily related to Other Property ($3953 million) and Property Catastrophe Excess ($2814 million) for the sixnine months ended JuneSeptember 30, 2019. The unfavorable loss reserve development in Global Property for the nine months ended September 30, 2019 was driven by higher losses from recent accident years mainly Typhoon Jebi and Hurricanes Irma, Michael, Florence, and Florence.Irma. A portion of this unfavorable loss reserve development is due to projected increased costs for claims adjusting associated with insureds' assignment of benefits to third parties, primarily associated with Hurricanes Irma and Michael exposures. Net unfavorable prior year loss reserve development was $18$29 million (6 points) for the sixnine months ended JuneSeptember 30, 2018. The six months ended June 30, 2019 included catastrophe losses, net2018, primarily related to Other Property ($20 million) and Property Catastrophe Excess ($11 million), resulting from higher than expected loss reporting from recent accident years, including $7 million of reinsurance and reinstatement premiums, of $8 million (3 points) compared to $3 million (1 point) forincreases from natural catastrophes, including the six months ended June 30, 2018. Catastrophe losses for the six months ended June 30, 2019 were primarily from Cyclone Fani ($3 million), the2017 North Queensland Monsoon ($2 million), and Windstorm Alfrida ($2 million). Three months ended June 30, Six months ended June 30, Global Property (Millions) 2019 2018 2019 2018 Other property $ 114.8 $ 232.5 $ 267.6 $ 405.2 Property catastrophe excess 78.8 45.6 244.1 212.2 Agriculture 42.6 47.3 55.2 54.6 Total $ 236.2 $ 325.4 $ 566.9 $ 672.0 Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Other property $ 103.3 $ 138.8 $ 370.9 $ 544.0 Property catastrophe excess 42.3 55.3 286.4 267.5 Agriculture 8.0 9.6 63.2 64.2 Total $ 153.6 $ 203.7 $ 720.5 $ 875.7 JuneSeptember 30, 2019 and 201827%25% to $236$154 million for the three months ended JuneSeptember 30, 2019 from $325$204 million for the three months ended JuneSeptember 30, 2018 due to decreases in Other Property ($36 million) and Property Catastrophe Excess ($13 million). The decrease in Other Property was due to lower premium volume on an Other Property fronting arrangement ($16 million), reduced treaty participations, and non-renewals of certain accounts.9594 million), reduced treaty participations, and non-renewals of certain accounts. This decrease was partially offset by an increase in Property Catastrophe Excess ($3318 million).Six months ended June 30, 2019 and 2018Global Property's gross written premiums decreased 16% to $567 million for the six months ended June 30, 2019 from $672 million for the six months ended June 30, 2018. The decrease in Other Property was due to lower premium volume on an Other Property fronting arrangement ($77 million), reduced treaty participations, and non-renewals of certain accounts. This decrease was partially offset by an increase in Property Catastrophe Excess ($32 million). Three months ended
June 30, Six months ended
June 30, Global Property (Millions) 2019 2018 2019 2018 Other property $ 90.3 $ 103.1 $ 180.7 $ 196.4 Property catastrophe excess 51.9 42.0 96.0 84.4 Agriculture 22.1 22.4 27.3 22.8 Total $ 164.3 $ 167.5 $ 304.0 $ 303.6 Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Other property $ 86.7 $ 98.6 $ 267.4 $ 295.0 Property catastrophe excess 49.4 50.9 145.4 135.3 Agriculture 23.8 23.2 51.1 46.0 Total $ 159.9 $ 172.7 $ 463.9 $ 476.3 JuneSeptember 30, 2019 and 20182%8% to $164$160 million for the three months ended JuneSeptember 30, 2019 from $168$173 million for the three months ended JuneSeptember 30, 2018.2018 due primarily to a decrease in Other Property ($12 million). The Other Property fronting treaty did not impact Global Property's net earned insurance and reinsurance premiums for either the 2019 or 2018 periods.SixJuneSeptember 30, 2019 and 2018was $304decreased 3% to $464 million for each of the sixnine months ended JuneSeptember 30, 2019 from $476 million for the nine months ended September 30, 2018. Decreases in Other Property ($28 million) were partially offset by increases in Property Catastrophe Excess ($10 million) and 2018.Agriculture ($5 million). The Other Property fronting treaty did not impact Global Property's net earned insurance and reinsurance premiums for either the 2019 or 2018 periods. Three months ended
June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, Global A&H (Millions) 2019 2018 2019 2018 2019 2018 2019 2018 Gross written premiums $ 152.8 $ 112.3 $ 322.1 $ 257.9 $ 137.4 $ 117.1 $ 459.5 $ 375.0 Net written premiums 120.6 82.8 255.5 198.3 104.6 87.9 360.1 286.2 Net earned insurance and reinsurance premiums 118.8 80.8 214.9 168.8 115.1 89.6 330.0 258.4 Loss and allocated LAE (71.8 ) (40.9 ) (135.0 ) (86.7 ) (63.6 ) (51.3 ) (198.6 ) (138.0 ) Insurance and reinsurance acquisition expenses (36.0 ) (26.4 ) (62.6 ) (55.6 ) (32.5 ) (26.7 ) (95.1 ) (82.3 ) $ 11.0 $ 13.5 $ 17.3 $ 26.5 $ 19.0 $ 11.6 $ 36.3 $ 38.1 Unallocated LAE (2.0 ) (1.0 ) (3.5 ) (2.6 ) (2.0 ) (1.7 ) (5.5 ) (4.3 ) Other underwriting expenses (5.9 ) (6.3 ) (12.0 ) (14.3 ) (6.8 ) (6.4 ) (18.8 ) (20.7 ) $ 3.1 $ 6.2 $ 1.8 $ 9.6 $ 10.2 $ 3.5 $ 12.0 $ 13.1 Service fee revenue 30.3 27.4 66.6 60.2 31.0 29.3 97.6 89.5 MGU unallocated LAE (5.3 ) (5.1 ) (9.4 ) (5.1 ) (4.3 ) (4.7 ) (13.7 ) (9.8 ) MGU other underwriting expenses (4.8 ) (3.5 ) (7.5 ) (11.9 ) (3.7 ) (2.0 ) (11.2 ) (13.9 ) MGU general and administrative expenses (15.0 ) (14.2 ) (31.2 ) (23.7 ) (15.1 ) (13.8 ) (46.3 ) (37.5 ) Underwriting income, including net service fee income $ 8.3 $ 10.8 $ 20.3 $ 29.1 $ 18.1 $ 12.3 $ 38.4 $ 41.4 Ratios: Loss ratio(1) 62.1 % 51.9 % 64.4 % 52.9 % 57.0 % 59.2 % 61.8 % 55.1 % Acquisition expense ratio(2) 30.3 % 32.7 % 29.1 % 32.9 % 28.2 % 29.8 % 28.8 % 31.8 % Other underwriting expense ratio(3) 5.0 % 7.8 % 5.6 % 8.5 % 5.9 % 7.1 % 5.7 % 8.0 % Combined ratio 4) 97.4 % 92.4 % 99.1 % 94.3 % 91.1 % 96.1 % 96.3 % 94.9 % JuneSeptember 30, 2019 and 201837%17% to $153$137 million for the three months ended JuneSeptember 30, 2019 from $112$117 million for the three months ended JuneSeptember 30, 2018 due to higher writings for risks primarily originating from the U.S. Net written premiums increased 46%19% to $121$105 million for the three months ended JuneSeptember 30, 2019 from $83$88 million for the three months ended JuneSeptember 30, 2018 due to higher writings for risks primarily originating from the U.S. as well as higher retentions.97%91% for the three months ended JuneSeptember 30, 2019 compared to 92%96% for the three months ended JuneSeptember 30, 2018. Net favorable prior year loss reserve development was $1$6 million (1 point)(5 points) for the three months ended JuneSeptember 30, 2019 compared to net favorable prior year loss reserve development of $5$3 million (6(3 points) for the three months ended JuneSeptember 30, 2018. The decrease in the acquisition expense ratio from the prior period was due to business mix as increased primary insurance writings for risks originating from the U.S. are recorded at lower net commission ratios.$8$18 million for the three months ended JuneSeptember 30, 2019 compared to $11$12 million for the three months ended JuneSeptember 30, 2018. The decreaseincrease of $3$6 million was primarily driven by lowerhigher underwriting income due to the change inhigher favorable loss reserve development compared to the prior period.Sixperiod and higher net earned insurance and reinsurance premiums.JuneSeptember 30, 2019 and 201825%23% to $322$460 million for the sixnine months ended JuneSeptember 30, 2019 from $258$375 million for the sixnine months ended JuneSeptember 30, 2018 due to higher writings for risks primarily originating from the U.S. Net written premiums increased 29%26% to $256$360 million for the sixnine months ended JuneSeptember 30, 2019 from $198$286 million for the sixnine months ended JuneSeptember 30, 2018 due to higher writings for risks primarily originating from the U.S. as well as higher retentions.99%96% for the sixnine months ended JuneSeptember 30, 2019 compared to 94%95% for the sixnine months ended JuneSeptember 30, 2018. The increase inFor the combined ratio was due tonine months ended September 30, 2019, net unfavorablefavorable prior year loss reserve development of $5was $1 million (2 points) for the six months ended June 30, 2019(less than 1 point) compared to $8$11 million (5(4 points) of net favorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2018. The net unfavorable loss reserve development recorded fordecrease in the six months ended June 30, 2019acquisition expense ratio from the prior period was due to higher than expected claims activity.$20$38 million for the sixnine months ended JuneSeptember 30, 2019 compared to $29$41 million for the sixnine months ended JuneSeptember 30, 2018. The decrease of $9$3 million was primarily driven by lower net service fee income and underwriting income due to the net unfavorable loss reserve development recorded for the sixnine months ended JuneSeptember 30, 2019 compared to the prior period. Three months ended
June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 $ 96.9 $ 60.9 $ 217.8 $ 176.4 $ 120.6 $ 76.5 $ 338.4 $ 252.9 89.2 55.1 197.4 155.7 113.2 72.6 310.6 228.3 87.3 55.5 163.0 109.9 98.7 58.4 261.7 168.3 (61.3 ) (31.7 ) (108.9 ) (53.3 ) (85.5 ) (34.1 ) (194.4 ) (87.4 ) (24.6 ) (14.6 ) (45.1 ) (28.7 ) (27.1 ) (16.2 ) (72.2 ) (44.9 ) $ 1.4 $ 9.2 $ 9.0 $ 27.9 Technical (loss) profit $ (13.9 ) $ 8.1 $ (4.9 ) $ 36.0 (2.2 ) (1.7 ) (4.1 ) (2.9 ) (3.0 ) (1.6 ) (7.1 ) (4.5 ) (6.7 ) (7.9 ) (14.9 ) (15.9 ) (8.8 ) (8.4 ) (23.7 ) (24.3 ) $ (7.5 ) $ (0.4 ) $ (10.0 ) $ 9.1 $ (25.7 ) $ (1.9 ) $ (35.7 ) $ 7.2 72.7 % 60.2 % 69.3 % 51.1 % 89.7 % 61.1 % 77.0 % 54.6 % 28.2 % 26.3 % 27.7 % 26.1 % 27.5 % 27.7 % 27.6 % 26.7 % 7.7 % 14.2 % 9.1 % 14.5 % 8.9 % 14.4 % 9.1 % 14.4 % 108.6 % 100.7 % 106.1 % 91.7 % 126.1 % 103.2 % 113.7 % 95.7 % JuneSeptember 30, 2019 and 201859%57% to $97$121 million for the three months ended JuneSeptember 30, 2019 from $61$77 million for the three months ended JuneSeptember 30, 2018 due primarily to increases in Casualty ($2833 million), and Aviation & Space ($6 million), and Trade Credit ($4 million). Net written premiums increased 62%55% to $89$113 million for the three months ended JuneSeptember 30, 2019 from $55$73 million for the three months ended JuneSeptember 30, 2018 due to the same lines of business as the gross written premiums increase.109%126% for the three months ended JuneSeptember 30, 2019 compared to 101%103% for the three months ended JuneSeptember 30, 2018. The higher net combined ratio was due to a higher Loss ratio driven by net unfavorable prior year loss reserve development and higher current accident year losses in Aviation & Space and Trade Credit, which included $1$6 million of loss development from the Ethiopian Airlines plane crash.$(8)$(26) million for the three months ended JuneSeptember 30, 2019 compared to an underwriting loss of $(0.4)$(2) million for the three months ended JuneSeptember 30, 2018. Specialty & Casualty had $6$10 million (7(10 points) of net unfavorable prior year loss reserve development for the three months ended JuneSeptember 30, 2019, primarily driven by MarineCasualty ($4 million) and Aviation & Space ($39 million) compared to $3$7 million (5(12 points) of net favorable prior year loss reserve development for the three months ended JuneSeptember 30, 2018, primarily driven by Aviation & SpaceContingency ($13 million) and Marine ($2 million).Six The net unfavorable prior year loss reserve for the three months ended JuneSeptember 30, 2019 for Casualty was due to higher than expected claims activity.24%34% to $218$338 million for the sixnine months ended JuneSeptember 30, 2019 from $176$253 million for the sixnine months ended JuneSeptember 30, 2018 due primarily to an increaseincreases in Casualty ($6395 million), Aviation & Space ($10 million), and Environmental ($6 million), partially offset by a decreasedecreases in Trade Credit ($1716 million) and Contingency ($9 million). Net written premiums increased 26% to $197 million for the six months ended June 30, 2019 from $156 million for the six months ended June 30, 2018 due to the same lines of business as the gross written premiums increase.106%114% for the sixnine months ended JuneSeptember 30, 2019 compared to 92%96% for the sixnine months ended JuneSeptember 30, 2018. The higher net combined ratio was due to a higher Loss ratio driven by net unfavorable prior year loss reserve development and higher current accident year losses in Trade Credit, which included $6 million from the Thomas Cook bankruptcy, and Aviation & Space, which included $4 million from the Ethiopian Airlines plane crash.$(10)$(36) million for the sixnine months ended JuneSeptember 30, 2019 compared to underwriting income of $9$7 million for the sixnine months ended JuneSeptember 30, 2018. Specialty & Casualty had $5$15 million (3(6 points) of net unfavorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2019, primarily driven by unfavorable loss reserve development in Casualty ($11 million), Marine ($4 million), and Aviation & Space ($4 million), Marine ($3 million), and Casualty ($2 million), partially offset by favorable loss reserve development in Trade Credit ($32 million) and Contingency ($2 million). For the sixnine months ended JuneSeptember 30, 2018, Specialty & Casualty had $10$18 million (9(11 points) of favorable prior year loss reserve development, primarily driven by Aviation & Space ($1112 million) and Marine ($3 million). Three months
ended June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 $ 56.1 $ 28.1 $ 117.9 $ 55.2 $ 74.1 $ 41.4 $ 192.0 $ 96.6 17.1 10.8 34.4 31.9 20.4 13.5 54.8 45.4 10.3 6.2 30.0 47.2 11.5 10.7 41.5 57.9 6.5 8.5 20.9 26.1 6.1 1.5 27.0 27.6 3.9 2.4 8.3 2.8 4.8 3.9 13.1 6.7 1.6 1.4 3.2 2.8 2.8 2.7 6.0 5.5 1.4 3.5 3.1 10.4 0.9 2.8 4.0 13.2 $ 96.9 $ 60.9 $ 217.8 $ 176.4 $ 120.6 $ 76.5 $ 338.4 $ 252.9 JuneSeptember 30, 2019 and 201859%57% to $97$121 million for the three months ended JuneSeptember 30, 2019 from $61$77 million for the three months ended JuneSeptember 30, 2018. Increases in gross written premiums were primarily driven by increases in Casualty ($2833 million), and Aviation & Space ($6 million), and Trade Credit ($4 million).SixJuneSeptember 30, 2019 and 201824%34% to $218$338 million for the sixnine months ended JuneSeptember 30, 2019 from $176$253 million for the sixnine months ended JuneSeptember 30, 2018. Increases in gross written premiums were primarily driven by increases in Casualty ($6395 million), Aviation & Space ($10 million), and Environmental ($6 million), partially offset by a decreasedecreases in Trade Credit ($1716 million) and Contingency ($9 million). Three months ended
June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 $ 50.2 $ 16.8 $ 88.6 $ 27.5 $ 57.6 $ 23.2 $ 146.2 $ 50.7 14.3 15.3 28.9 30.1 18.0 14.1 46.9 44.2 11.2 9.5 22.0 20.6 12.7 11.7 34.7 32.3 7.7 9.6 16.2 23.0 6.6 4.0 22.8 27.0 1.8 0.5 3.0 0.4 1.4 1.9 4.4 2.3 1.3 3.7 2.9 8.2 1.4 3.1 4.3 11.3 0.8 0.1 1.4 0.1 1.0 0.4 2.4 0.5 $ 87.3 $ 55.5 $ 163.0 $ 109.9 $ 98.7 $ 58.4 $ 261.7 $ 168.3 JuneSeptember 30, 2019 and 2018:55%71% to $87$99 million for the three months ended JuneSeptember 30, 2019 from $56$58 million for the three months ended JuneSeptember 30, 2018. Casualty ($3335 million) was the main driver for the increase from the prior period.SixNine months ended JuneSeptember 30, 2019 and 2018:48%56% to $163$262 million for the sixnine months ended JuneSeptember 30, 2019 from $110$168 million for the sixnine months ended JuneSeptember 30, 2018. Casualty ($5995 million) was the main driver for the increase from the prior period. Three months ended
June 30, Six months ended
June 30, Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 $ 1.2 $ 6.4 $ 2.6 $ 13.9 $ 2.1 $ 0.7 $ 4.7 $ 14.6 0.3 5.4 0.7 11.5 0.8 0.3 1.5 11.8 0.3 5.1 0.7 11.1 0.5 0.4 1.2 11.5 (2.4 ) (0.3 ) (3.5 ) 2.1 (0.9 ) 10.2 (4.4 ) 12.3 (1.8 ) (1.5 ) (2.5 ) (2.2 ) (0.1 ) (0.1 ) (2.6 ) (2.3 ) $ (3.9 ) $ 3.3 $ (5.3 ) $ 11.0 $ (0.5 ) $ 10.5 $ (5.8 ) $ 21.5 (0.2 ) - (0.7 ) (0.9 ) (0.2 ) (0.7 ) (0.9 ) (1.6 ) (1.1 ) (2.4 ) (3.2 ) (3.8 ) (1.4 ) (1.4 ) (4.6 ) (5.2 ) $ (5.2 ) $ 0.9 $ (9.2 ) $ 6.3 $ (2.1 ) $ 8.4 $ (11.3 ) $ 14.7 (1.0 ) (1.0 ) (1.8 ) (2.1 ) (1.2 ) (0.8 ) (3.0 ) (2.9 ) $ (6.2 ) $ (0.1 ) $ (11.0 ) $ 4.2 $ (3.3 ) $ 7.6 $ (14.3 ) $ 11.8 JuneSeptember 30, 2019 and 2018JuneSeptember 30, 2019 compared to $6 million of gross written premiums for the three months ended June 30, 2018. Gross written premiums for the three months ended June 30, 2018 relate primarily to premiums from a quota share.$(6) million and $(0.1)$(3) million for the three months ended JuneSeptember 30, 2019 and 2018, respectively.compared to underwriting income of $8 million for the three months ended September 30, 2018. Runoff & Other recorded $3$1 million of net unfavorable prior year loss reserve development for the three months ended JuneSeptember 30, 2019 compared to $3$11 million of net favorable prior year loss reserve development for the three months ended JuneSeptember 30, 2018. The net unfavorable prior year loss reserve development for the threeJune 30, 2019 was due primarily to an increase in reserves for a disputed Latin American Facultative Surety claim in arbitration.Six months ended JuneSeptember 30, 2019 and 2018$3$5 million of gross written premiums for the sixnine months ended JuneSeptember 30, 2019 compared to $14$15 million of gross written premiums for the sixnine months ended JuneSeptember 30, 2018. Gross written premiums for the sixnine months ended JuneSeptember 30, 2018 relate primarily to premiums from a loss portfolio transfer and quota share.$(11)$(14) million for the sixnine months ended JuneSeptember 30, 2019 compared to an underwriting gainincome of $4$12 million for the sixnine months ended JuneSeptember 30, 2018. Runoff & Other recorded $4$5 million of net unfavorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2019 compared to $12$23 million of net favorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2018. The net unfavorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2019 was due primarily to an increase in reserves for a disputed Latin American Facultative Surety claim in arbitration. The net favorable prior year loss reserve development for the sixnine months ended JuneSeptember 30, 2018 was due primarily to reductions in World Trade Center claims in response to revised information received by the Company and runoff Casualty reserves.JuneSeptember 30, 2019 and 2018 Three months ended June 30, 2019 Global Property Global A&H Specialty & Casualty Total Three months ended September 30, 2019 Global Property Global A&H Specialty & Casualty Total Gross ratios: Loss ratio 67.8% 59.7% 89.3% 71.0% 106.3% 56.2% 93.5% 88.7% Acquisition expense ratio 20.4% 28.7% 26.4% 22.1% 19.6% 26.8% 26.4% 20.5% Other underwriting expense ratio 7.8% 3.8% 6.8% 7.5% 6.6% 4.6% 8.3% 7.4% Gross Combined ratio 96.0% 92.2% 122.5% 100.6% 132.5% 87.6% 128.2% 116.6% Ceded ratios: Loss ratio 26.6% 51.7% 220.8% 56.4% 74.3% 53.3% 138.9% 72.7% Acquisition expense ratio 32.1% 23.7% 11.8% 26.9% 23.2% 21.9% 15.3% 22.2% Ceded Combined ratio 58.7% 75.4% 232.6% 83.3% 97.5% 75.2% 154.2% 94.9% Net ratios: Loss ratio 81.5% 62.1% 72.7% 75.0% 118.8% 57.0% 89.7% 93.2% Acquisition expense ratio 16.6% 30.3% 28.2% 20.8% 18.3% 28.2% 27.5% 20.1% Other underwriting expense ratio 10.3% 5.0% 7.7% 9.6% 9.2% 5.9% 8.9% 9.5% Net Combined ratio 108.4% 97.4% 108.6% 105.4% 146.3% 91.1% 126.1% 122.8% 46 points higher than the gross combined ratio primarily due to the costs of retrocessional protections with limited ceded loss recoveries for the three months ended JuneSeptember 30, 2019, driven by Global Property. Within Specialty & Casualty, the lower net combined ratio was primarily due to high ceded loss recoveries in Aviation & Space. Three months ended June 30, 2018 Global Property Global A&H Specialty & Casualty Total Three months ended September 30, 2018 Global Property Global A&H Specialty & Casualty Total Gross ratios: Loss ratio 45.5% 52.5% 56.6% 49.9% 74.2% 66.7% 53.0% 68.8% Acquisition expense ratio 25.7% 29.0% 24.3% 24.3% 20.6% 28.0% 25.9% 20.1% Other underwriting expense ratio 6.5% 5.7% 12.6% 10.2% 7.1% 5.4% 12.9% 8.3% Gross Combined ratio 77.7% 87.2% 93.5% 84.4% 101.9% 100.1% 91.8% 97.2% Ceded ratios: Loss ratio 50.5% 54.4% 23.5% 51.6% 8.1% 89.6% (25.7)% 32.9% Acquisition expense ratio 33.7% 18.5% 16.3% 30.3% 28.0% 22.4% 8.5% 24.8% Ceded Combined ratio 84.2% 72.9% 39.8% 81.9% 36.1% 112.0% (17.2)% 57.7% Net ratios: Loss ratio 42.2% 51.9% 60.2% 49.0% 102.2% 59.2% 61.1% 81.1% Acquisition expense ratio 20.4% 32.7% 26.3% 21.6% 17.4% 29.8% 27.7% 18.4% Other underwriting expense ratio 10.8% 7.8% 14.2% 12.4% 10.1% 7.1% 14.4% 11.1% Net Combined ratio 73.4% 92.4% 100.7% 83.0% 129.7% 96.1% 103.2% 110.6% one point lower14 points higher than the gross combined ratio for the three months ended JuneSeptember 30, 2018.Six The net combined ratio was higher than the gross combined ration due primarily to the costs of retrocessional protections with limited ceded loss recoveries.JuneSeptember 30, 2019 and 2018 Six months ended June 30, 2019 Global Property Global A&H Specialty & Casualty Total Nine months ended September 30, 2019 Global Property Global A&H Specialty & Casualty Total Gross ratios: Loss ratio 56.1% 64.6% 76.7% 64.4% 73.5% 61.7% 83.0% 72.9% Acquisition expense ratio 21.4% 27.5% 25.8% 21.9% 20.8% 27.3% 26.1% 21.4% Other underwriting expense ratio 8.0% 4.2% 8.3% 8.0% 7.5% 4.3% 8.3% 7.8% Gross Combined ratio 85.5% 96.3% 110.8% 94.3% 101.8% 93.3% 117.4% 102.1% Ceded ratios: Loss ratio 30.8% 65.2% 147.4% 52.9% 46.3% 61.2% 144.7% 59.8% Acquisition expense ratio 32.1% 22.4% 8.1% 26.7% 28.9% 22.3% 10.5% 25.1% Ceded Combined ratio 62.9% 87.6% 155.5% 79.6% 75.2% 83.5% 155.2% 84.9% Net ratios: Loss ratio 65.3% 64.4% 69.3% 67.7% 83.7% 61.8% 77.0% 76.7% Acquisition expense ratio 17.4% 29.1% 27.7% 20.6% 17.7% 28.8% 27.6% 20.4% Other underwriting expense ratio 10.9% 5.6% 9.1% 10.4% 10.3% 5.7% 9.1% 10.0% Net Combined ratio 93.6% 99.1% 106.1% 98.7% 111.7% 96.3% 113.7% 107.1% sixnine months ended JuneSeptember 30, 2019, driven by Global Property. Within Specialty & Casualty, the lower net combined ratio was primarily due to high ceded loss recoveries in Aviation & Space. Six months ended June 30, 2018 Global Property Global A&H Specialty & Casualty Total Nine months ended September 30, 2018 Global Property Global A&H Specialty & Casualty Total Gross ratios: Loss ratio 47.5% 53.8% 49.3% 49.7% 56.8% 58.3% 50.5% 56.3% Acquisition expense ratio 23.8% 29.9% 24.2% 23.0% 22.7% 29.2% 24.8% 22.0% Other underwriting expense ratio 7.7% 6.4% 12.8% 10.0% 7.5% 6.1% 12.8% 9.4% Gross Combined ratio 79.0% 90.1% 86.3% 82.7% 87.0% 93.6% 88.1% 87.7% Ceded ratios: Loss ratio 48.4% 56.7% 35.0% 50.9% 35.5% 68.5% 18.0% 44.9% Acquisition expense ratio 29.5% 20.2% 9.9% 26.0% 29.0% 21.0% 9.3% 25.6% Ceded Combined ratio 77.9% 76.9% 44.9% 76.9% 64.5% 89.5% 27.3% 70.5% Net ratios: Loss ratio 47.1% 52.9% 51.1% 49.3% 67.1% 55.1% 54.6% 60.4% Acquisition expense ratio 20.9% 32.9% 26.1% 21.9% 19.6% 31.8% 26.7% 20.7% Other underwriting expense ratio 11.7% 8.5% 14.5% 13.7% 11.1% 8.0% 14.4% 12.8% Net Combined ratio 79.7% 94.3% 91.7% 84.9% 97.8% 94.9% 95.7% 93.9% 26 points higher than the gross combined ratio primarily due to the costs of retrocessional protections with limited ceded loss recoveries for the sixnine months ended JuneSeptember 30, 2018.Group'sGroup’s results, management has included and discussed the following non-GAAP financial measures: Adjusted book value, Adjusted book value per share, Adjusted tangible book value, Adjusted tangible book value per share and Operating (loss) income attributable to common shareholders. The Company believes that these non-GAAP financial measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of the Company'sCompany’s results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP.non-GAAP financial measures used to show the Company'sCompany’s total worth on a per-share basis and isare useful to management and investors in analyzing the intrinsic value of the Company.(which were issued to the cornerstone investors), and the Earnedearned portion of share-based compensation awards. Adjusted book value is derived by summing Total common shareholders'shareholders’ equity, the Series B preference share amount reflected in mezzanine equity, and the Earned portion of future proceeds from stock option awards. Outstanding warrants are excluded as they are anti-dilutive as of the respective reporting dates.As of June Adjusted tangible book value is derived by subtracting Goodwill, Intangible assets and Net deferred tax liability on intangible assets from Adjusted book value.shareholders'shareholders’ equity and Book value per common share, the most directly comparable GAAP measures, are presented in the table below.
June 30, 2019
December 31, 2018 September 30, December 31, (Expressed in millions of U.S. dollars, except share and per share amounts) 2019 2018 115,296,918 115,151,251 115,299,342 115,151,251 11,901,670 11,901,670 11,901,670 11,901,670 374,912 - 648,551 — 152,772 - 267,350 — 127,726,272 127,052,921 128,116,913 127,052,921 $ 1,784.1 $ 1,704.5 Total common shareholders’ equity $ 1,742.6 $ 1,704.5 241.3 232.2 236.0 232.2 1.9 - 3.4 — $ 2,027.3 $ 1,936.7 $ 1,982.0 $ 1,936.7 Goodwill (400.4 ) (400.6 ) Intangible assets (183.8 ) (195.6 ) Net deferred tax liability on intangible assets 24.0 26.3 Adjusted tangible book value $ 1,421.8 $ 1,366.8 $ 15.47 $ 14.80 $ 15.11 $ 14.80 $ 15.87 $ 15.24 $ 15.47 $ 15.24 Adjusted tangible book value per share $ 11.10 $ 10.76 (losses)and losses on investments, net foreign exchange gains (losses) and the associated income tax expense or benefit. The Company'sCompany’s management believes that Operating (loss) income attributable to common shareholders is useful to investors because it is more reflective of the Company'sCompany’s core business, as it removes the variability arising from fluctuations in the Company'sCompany’s fixed maturity investment portfolio, equity investments trading, investments-related derivatives, and net foreign exchange gains (losses) and the associated income tax expense or benefit of those fluctuations. The following is a reconciliation of net (loss) income attributable to common shareholders to Operating (loss) income attributable to common shareholders: Three months
ended June 30, Six months
ended June 30, $ 6.6 $ 97.8 $ 101.9 $ 138.3 (31.1 ) (32.5 ) (114.1 ) (44.8 ) - (25.6 ) (5.1 ) (22.1 ) 5.1 0.8 16.8 - $ (19.4 ) $ 40.5 $ (0.5 ) $ 71.4 (Expressed in millions of U.S. dollars) Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Net (loss) income attributable to common shareholders $ (2.7 ) $ (28.0 ) $ 99.2 $ 110.3 Adjustment for net realized and unrealized (gains) losses on investments (69.2 ) 7.8 (183.3 ) (37.0 ) Adjustment for net foreign exchange (gains) losses (4.3 ) 0.4 (9.4 ) (21.7 ) 10.8 (1.6 ) 27.6 (1.6 ) Operating (loss) income attributable to common shareholders $ (65.4 ) $ (21.4 ) $ (65.9 ) $ 50.0 gainslosses (gains) on investments and the income tax expense (benefits) associated with the adjustment for net foreign exchange gains.gains (losses). The income tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors.JuneSeptember 30, 2019, through CMIG International's wholly-owned Bermuda holding company, CM Bermuda Ltd. ("CM Bermuda"). During 2019, CMIG has made several public announcements relating to defaults and cross-defaults on certain bonds and other debt obligations issued by certain subsidiaries of CMIG (the "CMIG Defaults"), the failure and uncertainty of CMIG's subsidiaries to repay their debt obligations as they become due and the existence of certain asset freeze orders relating to the equity interests of CMIG in certain Chinese subsidiaries not within the chain of control of Sirius Group. On May 3, 2019, in connection with the CMIG Defaults, Sirius Bermuda and Sirius Group entered into a voluntary undertaking with the BMA to provide further comfort to the BMA as the group supervisor of Sirius Group and primary regulator of Sirius Bermuda, the designated insurer for group supervisory purposes regarding the potential risks to Sirius Group in connection with the CMIG Defaults. Pursuant to the voluntary undertaking, each of Sirius Group and Sirius Bermuda have agreed, until May 3, 2020, (a) to provide ten days prior written notice to the BMA prior to declaring any dividend or capital distribution, which notice shall include an affidavit confirming that the declaration and payment of such dividend would not be in breach of (i) the provisions of section 54 of the Companies Act 1981 in the case of Sirius Bermuda, (ii) the Minimum Liquidity Ratio as defined in the Insurance Act 1978 in the case of Sirius Bermuda; and (iii) the Target Capital Level of 120% of the Enhanced Capital Requirement as defined by the Bermuda Solvency Capital Requirement promulgated by the BMA for Sirius Group and Sirius Bermuda, and a summary description of the use proceeds from such declaration or dividend or capital distribution within Sirius Group or Sirius Bermuda; (b) not to enter into any guarantees, keepwells, loans or other financial arrangements between Sirius Group and CMIG, or provide any credit support with respect to any obligations of CMIG; and (c) not to enter into any related party transaction with CMIG.sixnine months ended JuneSeptember 30, 2019, Sirius International did not declare a dividend and paid an insignificant amount of dividends declared in 2017.JuneSeptember 30, 2019, without prior regulatory approval. As of December 31, 2018, Sirius America had $522 million of statutory surplus and $108 million of earned surplus. For the sixnine months ended JuneSeptember 30, 2019, Sirius America did not pay any dividends to its immediate parent.sixnine months ended JuneSeptember 30, 2019, Sirius Group did not pay any dividends. As of JuneSeptember 30, 2019, Sirius Group had $76$62 million of net unrestricted cash, short-term investments, and fixed maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.There is aobligatesobligated Sirius International to make contributions to Sirius America's surplus in order for Sirius America to maintain surplus equal to at least 125% of the company action level risk-based capital as defined in the National Association of Insurance Commissioners' Property/Casualty Risk-Based Capital Report.Report was terminated. The agreement providesprovided for a maximum contribution to Sirius America of $200 million. For the six months ended June 30, 2019, Sirius International did not make any contributions to the surplus of Sirius America.an untaxeda reserve referred to as a "Safety Reserve." As of JuneSeptember 30, 2019, Sirius International's Safety Reserve amounted to SEK 10.7 billion, or $1.2$1.1 billion (based on the JuneSeptember 30, 2019 SEK to USD exchange rate). Under 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 ($224 million based on the September 30, 2019 SEK to USD exchange rate) is only required to be paid by Sirius 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, Swedish regulatory authorities apply no taxes to the Safety Reserve when calculating solvency capital under Swedish insurance regulations.positive effectSafety Reserve balance as of the decreased tax rate on the deferred tax liability is offset byDecember 31, 2018, Sirius International recorded an additional deferred tax liability as of December 31, 2018 in the amount of $15SEK 132.1 million, as of December 31, 2018.or $14 million (based on the September 30, 2019 SEK to USD exchange rate). ($251 million as of June 30, 2019) is included in solvency capital. Access to the Safety Reserve is restricted to coverage of insurance and reinsurance losses and to coverage of a breach of the Solvency Capital Requirement. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the $1.2$1.1 billion balance of the Safety Reserve, without any provision for deferred taxes, in Sirius International's regulatory capital when assessing Sirius International and Sirius Group's financial strength. Subject to certain limitations under Swedish law, Sirius International is permitted to transfer certain portions of its pre-tax income to its Swedish parent companies to minimize taxes (referred to as a group contribution). For the sixnine months ended JuneSeptember 30, 2019, Sirius International did not transfer any of its 2019 pre-tax income via group contributions to its Swedish parent companies.JuneSeptember 30, 2019 and December 31, 2018:
June 30, 2019
December 31, 2018 (Expressed in millions of U.S. dollars, except multiples) September 30, 2019 December 31, 2018 $ 2,023.3 $ 2,016.7 $ 2,186.4 $ 2,016.7 879.5 647.2 807.7 647.2 256.9 206.9 250.4 206.9 126.6 110.6 135.9 110.6 251.4 261.1 237.9 261.1 3,537.7 3,242.5 3,618.3 3,242.5
116.8
119.4 145.8 119.4 427.2 405.2 448.1 405.2 861.3 630.6 842.6 630.6 237.6 186.8 236.8 186.8 158.8 141.6 155.2 141.6 188.1 159.8 173.8 159.8 1,989.8 1,643.4 2,002.3 1,643.4 $ 1,547.9 $ 1,599.1 $ 1,616.0 $ 1,599.1
0.6
x
0.6
x0.6 x 0.6 x 0.9 x 0.9 x 0.9 x 0.9 x below in the "Financingtable below under "Financing."table.JuneSeptember 30, 2019 and December 31, 2018:
June 30, 2019
December 31, 2018 $ 292.3 $ 303.6 393.6 393.2 685.9 696.8 241.3 232.2 1,784.1 1,704.5 $ 2,711.3 $ 2,633.5 25 % 26 % 34 % 35 % (Expressed in millions of U.S. dollars, except ratios) September 30, 2019 December 31, 2018 2017 SEK Subordinated Notes $ 276.5 $ 303.6 2016 SIG Senior Notes 393.8 393.2 Total debt 670.3 696.8 Series B preference shares 236.0 232.2 Common shareholders' equity 1,742.6 1,704.5 Total capital $ 2,648.9 $ 2,633.5 Total debt to total capital 25 % 26 % Total debt and Series B preference shares to total capital 34 % 35 % 3.9%4.0% and 3.5% annualized for the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively. Sirius Group recorded $6$9 million of interest expense, inclusive of amortization of issuance costs, on the 2017 SEK Subordinated Notes for each of the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively.$10$14 million of interest expense, inclusive of amortization of issuance costs on the 2016 SIG Senior Notes, for each of the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively.JuneSeptember 30, 2019 and December 31, 2018, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 3.02.9 billion and SEK 2.9 billion, respectively, or $319$301 million and $321 million, respectively (based on the JuneSeptember 30, 2019 and December 31, 2018 SEK to USD exchange rates). As of JuneSeptember 30, 2019 and December 31, 2018, Sirius America Insurance Company's trust arrangements were collateralized by pledged assets and assets in trust of $57$58 million and $56 million, respectively. As of JuneSeptember 30, 2019 and December 31, 2018, Sirius Bermuda's trust arrangements were collateralized by pledged assets and assets in trust of $350$351 million and $320 million, respectively.JuneSeptember 30, 2019, there were no outstanding borrowings under the Facility.JuneSeptember 30, 2019, Sirius Group was in compliance with all of the covenants under the 2017 SEK Subordinated Notes, the 2016 SIG Senior Notes, the Nordea Bank Finland Abp, London Branch facility, and the DNB Bank ASA, Sweden Branch facility. In addition, as of JuneSeptember 30, 2019, Sirius Group was in compliance with all of the covenants under the Facility.sixnine months ended JuneSeptember 30, 2019, other than as disclosed in "Note 5. Reserves for unpaid losses and adjustment expenses" in the Notes to Consolidated Financial Statements included within "Part I, Item 1. Financial Statements." with respect to a decrease in our reserve for loss and LAE reserves, and "Note 9. Debt and standby letters of credit facilities" in the Notes to Consolidated Financial Statements included within "Part I, Item 1. Financial Statements." with respect to our long term debt obligations, there were no other material changes in our contractual obligations as disclosed in the table of contractual obligations, and related footnotes, included in our Annual Report.sixnine months ended JuneSeptember 30, 2019 and 2018. Six Months Ended (Millions) June 30, 2019 June 30, 2018 Net cash provided from (used for)(1) Operations $ 15.0 $ 35.0 Investing activities (12.8 ) (126.7 ) Financing activities (0.1 ) 1.4 Effect of exchange rate changes on cash (3.8 ) (10.3 ) (Decrease) increase in cash during year $ (1.7 ) $ (100.6 ) Nine months ended (Millions) September 30, 2019 September 30, 2018 Operations $ 87.9 $ 107.3 Investing activities (50.8 ) (208.0 ) Financing activities (0.1 ) 1.4 Effect of exchange rate changes on cash (9.4 ) (9.8 ) Increase (decrease) in cash during year $ 27.6 $ (109.1 ) sixnine months ended JuneSeptember 30, 2019 and 2018was $15were $88 million and $35$107 million for the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively. Cash flows from operations decreased $20$19 million for the sixnine months ended JuneSeptember 30, 2019 compared to the sixnine months ended JuneSeptember 30, 2018 as higher amounts of net premiums collected were more than offset by higher net paid losses.sixnine months ended JuneSeptember 30, 2019 and 2018, Sirius Group made long-term incentive payments totaling $2 million and $6 million, respectively.sixnine months ended JuneSeptember 30, 2019 and 2018$(13)$(51) million and $(127)$(208) million for the sixnine months ended JuneSeptember 30, 2019 and 2018, respectively. The current period reflected lower net purchases of common equity securities, partially offset by lowerhigher net salespurchases of fixed maturityshort-term investments.sixnine months ended JuneSeptember 30, 2019 and $1 million for the sixnine months ended JuneSeptember 30, 2018, respectively.sixnine months ended JuneSeptember 30, 2019, Sirius Group paid $9 million of interest on the 2016 Senior Notes and $6$9 million of interest on the 2017 SEK Subordinated Notes.sixnine months ended JuneSeptember 30, 2018, Sirius Group paid $9 million of interest on the 2016 Senior Notes and $6$9 million of interest on the 2017 SEK Subordinated Notes.sixnine months ended JuneSeptember 30, 2018, as stipulated in the stock purchase agreement between CMIG International and White Mountains Insurance Group ("White Mountains"), White Mountains paid Sirius Group $1 million for certain long-term incentive payments that Sirius Group paid to its employees.sixnine months ended JuneSeptember 30, 2019. For additional information regarding our critical accounting estimates, refer to our 2018 Annual Report.JuneSeptember 30, 2019. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that Sirius Group's disclosure controls and procedures are effective in allowing information required to be disclosed in reports filed under the Exchange Act to be recorded, processed, summarized and reported within time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to Sirius Group's management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.and dispositive control over the Sirius Group common shares as of JuneSeptember 30, 2019, through CMIG International's wholly-owned Bermuda holding company, CM Bermuda. In April 2019, subsidiaries of CMIG announced the existence of certain asset freeze orders relating to CMIG's Chinese subsidiaries and cross-defaults, ofrelating to, among others, approximately US$300 million and US$500 million on certain of CMIG's subsidiaries' bonds not within the chain of control of Sirius Group. Since then, the US$300 million bonds were subsequently accelerated and repaid in full; however, the US$500 million bonds were unable to be repaid at its original maturity date of August 2, 2019 and, the CMIG subsidiary is currently soliciting consent from its bondholdersnoteholders agreed to extend the maturity date of the US$500 million notes from August 2, 2019 to August 2, 2020 and waivereduce the default.total aggregate principal amount to US$450 million in connection with the payment of a US$50 million mandatory partial redemption. In addition, on October 28, 2019, CMIG, through one of its subsidiaries, informed the holders of the US$500 million notes that are now due in 2020 that CMIG has also publiclybeen progressing with investment and asset dispositions with respect to certain non-core businesses and investment projects and expects to use the proceeds from these dispositions to repay the notes and redeem an aggregate principal amount of US$130 million of the notes with any interest accrued and unpaid thereon by June 2020. CMIG previously announced the uncertainty of CMIG to timely repay in fullmid-2019 that it was uncertain that certain super and short-term commercial paper obligations in the amount of approximately US$220 million whichand US$113 million would be timely repaid. However, these obligations were eventually repaid in full five and three days after the maturity date, and the delay of payment byrespectively. In early 2019, a CMIG subsidiary ofannounced that a previously declared US$30 million dividend would be delayed due to concerns regarding a possible cash shortfall following the payment of the dividend. TheThere were also previous public announcements by CMIG during 2019 that disclosed that an onshore creditors committee had been formed to stabilize the current situation and maintain the operations of CMIG.•••••3.1
3.2
3.3
31.110.1 31.1
31.2
32.1
32.2
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document Date: August 9,November 8, 2019
By:By:
/s/KERNAN "KIP" V. OBERTINGDate: August 9,November 8, 2019
By:By:
/s/ RALPH A. SALAMONE