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16-05-2025
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Q1 2025 Fidelis Insurance Holdings Ltd Earnings Call
Miranda Hunter; Group Head-Investor Relations; Fidelis Insurance Holdings Ltd. Daniel Burrows; Group Chief Executive Officer, Executive Director; Fidelis Insurance Holdings Ltd. Allan Decleir; Group Chief Financial Officer, Executive Director; Fidelis Insurance Holdings Ltd. Jonathan Strickle; Group Chief Actuarial Officer; Fidelis Insurance Holdings Ltd. Andrew Andersen; Analyst; Jefferies Leon Cooperman; Analyst; Omega Family Office, Inc. Matthew Carletti; Analyst; Citizens Meyer Shields; Analyst; Keefe, Bruyette & Woods North America Brian Meredith; Analyst; UBS Equities David Motemaden; Analyst; Evercore ISI Pablo Singzon; Analyst; JPMorgan Alex Scott; Analyst; Barclays Michael Zaremski; Analyst; BMO Capital Markets Rob Cox; Analyst; Goldman Sachs Operator Good morning ladies and gentlemen, and welcome to the Fidelis Insurance Group's first-quarter 2025 earnings conference call. As a reminder, this call is being recorded for replay purposes. Following the conclusion of formal remarks, the management will host a question-and-answer session and instructions will be given at that time. With that, I will now turn the call over to Miranda Hunter, Head of Investor Relations. Ms. Hunter, please go ahead. Miranda Hunter Good morning and welcome to Fidelis Insurance Group's first-quarter 2025 earnings conference call. With me today are Dan Burrows, our CEO; Allan Decleir, our CFO; and Johnny Strickle, our Group Managing Director. Before we begin, I'd like to remind everyone that statements made during the call, including the question-and-answer section, may include forward-looking statements. These statements are based upon management's current assessments and assumptions and are subject to a number of risks and uncertainties, and emerging information developing over time. These risks and uncertainties are described in our first quarter earnings press release and our most recent annual report on Form 20-F filed with the SEC as available on our website at the Although we believe that the expectations reflected in forward-looking statements have a reasonable basis when made, we can give no assurances that these expectations will be achieved. Consequently, actual results may differ materially from those expressed or implied. For more information including on the risks and other factors that may affect future performance, investors should review the Safe Harbor regarding forward-looking statements included in our first quarter earnings press release available on our website, as well as those periodic reports that are filed with us with the SEC from time to time. Management will also make reference to certain non-GAAP measures of financial performance. The reconciliation to U.S. GAAP for each non-GAAP financial measure can be found in our current report on Form 6-K furnished to the SEC yesterday, which contains our earnings press release and is available on our website, With that, I'll turn the call over to Dan. Daniel Burrows Thanks, Miranda. Good morning, everyone, and thank you for joining us on our call today. I want to begin by reiterating our commitment to executing on our strategy of pursuing profitable underwriting opportunities and strategic capital management. In a period that has seen the highest first quarter industry catastrophe losses in over a decade and global political uncertainty causing volatility in the financial markets, we have remained focused on providing solutions for our clients across the globe and actively managing our capital. We believe our strong capital position, leading and diversified portfolio of short-tail risk with no casualty exposure, and our measured approach to investments leave us well-positioned to navigate the current environment and capitalize on market conditions that continue to generate good underwriting margin. For the first quarter, we recorded top line growth of 14%, driven by strong retention levels and new business opportunities across the portfolio. This included new partnerships as well as reinstatement premiums in our reinsurance segment. Our combined ratio for the quarter was 115.6%, reflecting the impacts of the California wildfires. Specifically, the impact from the wildfires to our first quarter results was $167 million which is tracking to the lower end of our expected range. This is net of expected recoveries, reinstatement premiums, and tax. The wildfires were yet another reminder of the impacts of climate change and the increasing frequency and severity of secondary perils. We write a leading book of property insurance and reinsurance, and given the relative size of this portfolio, we believe our performance demonstrates the quality of our underlying portfolio and the importance of active exposure management, including the strategic use of outwards reinsurance. Across our portfolio more broadly, we continue to see an attractive trading environment supported by strong margins across our lines of business. After years of compound rate increases, we are still in one of the best underwriting environments I've seen in my career. While we have seen increasing competition in some lines, our portfolio is well-diversified across over hundred lines of business. And our lead positioning, long-term relationships, distribution channels, and (inaudible) leverage afford us access to the most compelling risks at preferential rates, terms, and conditions. As a short-tail writer, our differentiated position is a key advantage at all stages of the cycle. And as a leader in a verticalized market, we are less impacted by the effects of rating pressure. Within insurance, the first quarter is particularly significant for our marine portfolio. We saw continued growth year-on-year. This again was predominantly driven by new construction business where we saw capacity-driven demand as well as the continuation of our strategy to leverage our capacity across the subclasses to optimize margin. Off the back of a strong fourth quarter, asset-backed finance and portfolio credit continue to record notable growth as we recognized revenue from our partnership with Euclid Mortgage and executed two new deals with a repeat client in our structured credit portfolio. As a reminder, a large proportion of our structured credit business comes from one-off transactions which do not renew in the same way as traditional insurance risks. Binding business with repeat clients in this space demonstrates the value we are able to bring to clients in structuring capital efficient solutions. In direct property, a core part of our portfolio, we saw strong retention levels in the first quarter and a continued flow of new business. We have a market-leading direct and facultative account which after years of compound rate increases, continues to produce one of the best margins in our business. Overall, growth in insurance was partially offset by a reduction in our aviation and aerospace premiums year-on-year which was largely driven by the timing of a line slip renewal which moved from Q1 and closed in the second quarter. Given rating levels and the current loss environments, we continue to take a disciplined approach to aviation, focusing on targeted deployment of capacity in areas of higher margin. We will not write business that does not meet our underwriting hurdles. Turning to reinsurance, we recorded strong growth driven by new business as well as reinstatement premiums associated with the California wildfire losses. Overall, we were pleased with the results of January 1 renewal season where we were able to uphold prior-year improvements to rates, terms and conditions, as well as add new business in both our international and U.S. portfolios as we continue to optimize and refine the portfolio within our view of risk. As we remain focused on deploying our capital to the right risk, we continue to explore new opportunities in highly accretive and profitable business segments to maximize our returns and access new risk and distribution. In addition to our cornerstone relationship with the Fidelis Partnership, we have now onboarded our first third-party partners and recognized revenue from these in the first quarter. While not material to the overall portfolio, we believe these partnerships offer the opportunity to augment our existing book at compelling returns and are part of the strategic evolution of our business. The bar for new partnerships remains high and must meet our internal underwriting hurdles. Turning to capital management, we remain committed to optimizing shareholder returns. And our strong balance sheet provides us with the flexibility to support profitable growth across our underwriting portfolio and to execute accretive capital management actions. We strategically purchased outwards reinsurance protection across the quarter, enabling us to capitalize on favorable buying conditions and enhance protection across our portfolio. In addition, given our current share price, we continue to believe share repurchases on our accretive use of excess capital. Year-to-date, we have repurchased $41.5 million of common shares and an average cost per share of $15.63. Allan will touch on this in more detail shortly. I would also like to provide an update on the Russia-Ukraine aviation litigation. Since our last call, we have continued to take action to de-risk our overall exposure by judiciously settling certain claims. Following continued settlement activity in the quarter, we have now settled or are in various stages of settlement discussions for approximately 80% of our total exposure related to the lesser policy claims in litigation. Of the remainder, the majority of the exposure is related to the English trial, for which we continue to hold reserves based on a probabilistic model of potential court outcomes. As of this morning, the judgment for the English trial is still pending. Depending on the judgment, we would expect an impact to prior-year development. In the event of a favorable judgment, this would result in positive prior-year development and would be reflected in the results following final resolution of the legal process, including any appeals. Conversely, should we face an adverse judgment, we anticipate that this would result in a net adverse prior-year development impact of up to $150 million, which would immediately be recognized in our results. Once we have received the results of the English trial, we will have resolved approximately 95% of the exposure in respect to lesser policy claims in litigation. Putting our exposure to this event essentially behind us. Looking ahead, our underlying portfolio continues to perform well, and we remain focused on capitalizing on attractive opportunities to drive growth and optimize margin. Before turning over to Allan, I wanted to reflect on an important milestone for the company. In the first quarter, we announced the appointment of Johnny Strickle as Group Managing Director. Many of you will know Johnny, who has been an integral member of our team since he joined for Fidels in 2020, contributing to all aspects of the business. Johnny's new role is a recognition of the value he brings to Fidelis. He will provide strategic, analytical and commercial leadership at group level, in addition to continuing to have full oversight for the company's actuarial functions. We have an exceptional leadership team and a strong pipeline of talent throughout the organization. Johnny's promotion reflects a high caliber of our people, all of whom drive our company's success. With that, I will pass over to Allan, who will provide more color on our first quarter financials. Allan Decleir Thanks, Dan. And good morning, everyone. I'd also like to acknowledge Johnny on his well-deserved promotion. I am confident that Johnny will continue to play a key role in our strategic growth and value creation opportunities. Now taking a closer look at our quarterly results. We had strong top line growth in the first quarter with gross premiums written at $1.7 billion, an increase of 14% versus the same quarter last year. In the insurance segment, gross premiums written increased by 7% to $1.3 billion. We saw our new business and asset-backed finance and portfolio credit, including our new partnership with Euclid Mortgage. We also had growth in our other lines from new business, while continuing to demonstrate our underwriting integrity by taking a disciplined approach to underwriting opportunities that didn't meet our thresholds. Meanwhile, in the reinsurance segment, market dynamics remained favorable, and we continue to find new opportunities to support our diversified portfolio. We grew gross premiums written by 39% to $456 million due to growth from new business as well as reinstatement prems related to the California wildfires. Excluding the reinstatement premiums, our growth and reinsurance would have been 15%. Our net premiums written increased by 32% versus the first quarter of 2024, consistent with our continued growth in gross premiums written, reinstatement premiums, and timing of outwards reinsurance purchases. Our net premiums earned increased by 24%, compared to the first quarter of 2024, driven by the growth in gross premiums written as well as the impact of the earned reinstatement premiums related to the California wildfires in our reinsurance segment. Turning to the combined ratio of 115.6% for the quarter. I'll break down the components in more detail. During the first quarter, our attritional loss ratio continued to trend positively. Improving to 22.7% compared to 30% in the prior-year period, reflecting the strength of our overall portfolio. While the first quarter was benign on attritional losses, it was a particularly elevated quarter for cat losses in terms of dollar value. Our catastrophe and large loss ratio was 55.3% or $333 million of losses, compared to 21.1% or $103 million in the prior-year period. Most of this loss was related to the California wildfires, with the remainder and other loss events in various lines of business, including property, aviation and aerospace, and other insurance. We recognize strong net favorable prior-year development of $41 million in a quarter, compared to $67 million in the same period last year with both of our segments contributing. The insurance segment experienced net favorable development of $8 million including better-than-expected loss emergence in our property and other insurance lines of business. This was partially offset by adverse development in our aviation and aerospace line of business. The reinsurance segment had net favorable development of $33 million in the first quarter driven by positive development and catastrophe losses, and benign prior-year attritional experience. Turning to expenses. Policy acquisition expenses from third parties were 27.8 points of the combined ratio for the quarter, consistent with the 27.9 points in the prior-year period. As we stated last quarter, we continue to expect the policy acquisition expense ratio to be in the low 30s and in the mid-20s in the insurance and reinsurance segments, respectively. The Fidelis Partnership commissions accounted for 13 points of the combined ratio for the quarter, compared to 15.7 points in the first quarter of 2024. There was no profit commission accrued in the quarter as the underwriting profits did not meet the required hurdle. This reflects our alignment with the Fidelis Partnership. Finally, our general and administrative expenses were $22 million versus $24 million in the first quarter of 2024. The decrease in expense was driven by lower variable compensation accrued in the quarter. Our net investment income increased to $50 million for the first quarter of 2025, compared with $41 million in the prior-year period, reflecting a higher earned yield on our cash and fixed income portfolio as well as an increase in investable assets compared to the prior-year period. As of March 31, our investable assets were $4.4 billion which decreased compared to $4.8 billion at year end. This decrease is primarily driven by claims payments for the California wildfires as well as our aviation litigation settlements. As of March 31, the average rating of fixed income securities remains very high at 8-plus, with a book yield of 5%. Average duration is consistent with year end at 2.9 years. Against the backdrop of market volatility in April, our fixed income and other investment portfolios have continued to perform in line with expectations and have generated an incremental net positive return, and the positioning of our portfolio has been resilient to market volatility. Turning to capital management. Our top priority remains reinvesting in the business by deploying capital into attractive growth initiatives. Additionally, we continually seek to optimize our outwards reinsurance purchasing. And when we have excess capital, we look to return it to shareholders through a combination of dividends and opportunistic share buybacks. In the first quarter, we repurchased 1.5 million common shares for $22 million at an average price of $15.37 per common share. Subsequent to quarter end, we repurchased 1.2 million shares for $19 million at an average price of $15.95. This brings our shares repurchased year-to-date to 2.7 million common shares at an average price of $15.63. That's approximately 73% of our current diluted book value per share, and that's highly accretive on both the book value and earnings per share basis to our shareholders. Since the commencement of our share repurchase program in 2024, our opportunistic approach to share repurchases has added approximately $54 million to our book value or $0.48 to our book value per share. As we look ahead, we have $103 million remaining under our current authorized repurchase plan. We also continued to pay a quarterly common dividend in the first quarter. And last week, we announced a $0.10 dividend payable in June. Our strong capital position enables us to pursue accretive growth opportunities across our portfolio while continuing to take an optimistic approach to share repurchases. In conclusion, we remain committed to our strategic initiatives and are competent in our ability to navigate the evolving market conditions. I'll now turn it back to Dan for additional remarks. Daniel Burrows Thank you, Allan. Before going into the dynamics across our segments in more detail, I wanted to spend a bit more time discussing the current global and economic environments and the potential impacts to our industry. Our team has done a comprehensive analysis of potential stress scenarios, including the impact of tariffs and inflation across all classes of business. We believe inflationary pressures will have the highest impact on certain long-tailed casualty classes, which are already under reserving pressure. As a reminder, we do not have any casualty exposure. We write a short-tail, diversified book of business, which enables us to adapt quickly to changing environments and helps to insulate our portfolio from macro headwinds. Further, our daily underwriting calls with the Fidelis Partnership are focused on making real time adjustments to our portfolio in order to align our underwriting strategy to our view of risk as the landscape continues to evolve. For example, inflationary impacts are already being factored in to pricing and insurance values across our property direct and facultated portfolio as risks renew. And for those lines more susceptible to political tensions, trade disruptions, or economic recession, such as political risks, asset-backed finance, and portfolio credit, we already incorporate a risk-weighting based on the potential impact of tariffs and country dependence on U.S. exports. We are confident in the positioning of our portfolio, and we will continue to carefully monitor our exposure and any client opportunities that arise from uncertainty. Now, delving into the dynamics and opportunities we see within our two segments. In insurance, we continue to build out our established book of specialty business, assessing new distribution channels and selling more products to more of our clients across the globe. In property, we are taking a disciplined stance and leveraging our capacity and strong client and broker relationships to maintain retention levels and market differentials. The market is verticalized and as a leader, we are able to access business at preferential terms to peers. This book performs incredibly well for us, and we see significant margin and opportunity to support new and existing business. In addition to high retention rates, we are seeing a strong pipeline of new business flowing into the ENS market from the admitted market, as well as opportunities to benefit from rate increases on certain loss impacted accounts. In marine, we continue to take a strategic approach, leveraging our capacity to optimize our business mix across the subclasses and maximize returns. In marine cargo, our capacity and participation on excess layers allows us to achieve a positive differential to market. We are also seeing a pipeline of capacity driven deals in new construction, which are supporting current growth in the portfolio. In aviation, we are monitoring the trading environment following a number of industry losses over the last two quarters, impacting the broader market and the subsequent withdrawal of some capacity. At current rating levels, we continue to take a measured approach to deployment, focusing on areas that produce the best margin. In our structured credit portfolio, we continue to develop our pipeline of deals following two of our strongest courses. We work with our clients to ensure good visibility and access to upcoming deal flow, and we also see opportunities for new business. For example, in conjunction with the Fidelis Partnership, we see the potential to unlock geographic diversification and distribution as this product expands to clients in new markets who are looking to access the global insurance market for capital relief. As discussed earlier, we are actively monitoring global economic environments when considering rating and deal flow in this sector. Turning to reinsurance, we have built a diverse portfolio, both by territory and peril. We continue to actively shape our portfolio with a focus on attachment points and program structure and targeted deployment of capacity with top tier clients at attractive margins. As a leader, we are able to set pricing on programs and take a proactive approach to secure terms and deals ahead of other markets. We have long established partnerships with our clients and continue to achieve strong market differentiation by offering meaningful capacity across programs and securing private layers. The market at April 1 was dominated by Japanese renewals. We have strong relationships with our core clients and brokers in the region, and we were able to effectively deploy capacity. As part of our nimble approach and focus on margin, we shifted capacity towards proportional coverage, where we see the benefit from underlying rate improvements coming through and away from (inaudible) programs where rating was less compelling. We also took advantage of market conditions with our outwards program, purchasing additional coverage at favorable terms. As a reminder, our strategy is to leverage the market on both the inwards and outward side of our book to optimize margin. We continue to buy a broad suite of outwards products, which includes traditional reinsurance as well as ILS-supported products, including the sponsoring of catastrophe bonds. As we look ahead, we are confident in our ability to deliver approximately 10% growth in gross premiums written for the year. We see considerable opportunity across the market as a whole, and we are in constant dialogue with both the Fidelis Partnership and third-parties to identify new opportunities to match our capital to the right risk. The way we approach underwriting, taking a holistic view of the market and reviewing risks across a portfolio on a daily basis, provides us with opportunities to drive growth and optimize margin. We are broadening distribution, bringing more products to our clients, and leveraging our positioning as a leader to drive market differentials. We are confident in our underlying portfolio and our ability to generate profitable underwriting opportunities in what remains an incredibly attractive market environment. And coupled with our strong balance sheet and active capital management, we are focused on maximizing returns for our shareholders. With that, operator, we will now open it for questions. Operator (Operator Instructions) Andrew Andersen , Jefferies. Andrew Andersen Hey, good morning. If I back out the reinstatement premiums, it seems consolidated growth was maybe 8 or 9%, but I think there was also a timing headwind here. And if I think of aviation and aerospace, I think that's a little bit more weighted to the first half of the year. So I guess the question is on an underlying basis, would you think there's some better growth opportunities in the second half of the year? Allan Decleir Hi, yeah, it's Alan. I'll answer the first part, and then I'll let Dan jump in. You're right, we had one contract that moved from, in the aviation line of business that moved from a March renewal to an April renewal, and that was pretty much the same amount by coincidence as the reinstatement premiums that we had for the quarter which were on a gross basis of about $80 million. Daniel Burrows Yeah, thanks, Alan, and thanks for the question. What I would say in our portfolio, we have over 100 different lines of business, so highly diversified. We're confident in the 10% growth ambition for the year. We do see a lot of opportunity in what is still one of the best trading environments we've seen in many years. So there are pockets of pressure, but we are seeing healthy margins across the portfolio. We have new distribution channels, we have the BRICS initiative, with the TFP and the Middle East office, Lloyd's Syndicate, new distribution channels, so we're very confident we can grow the market, grow our. Our portfolio that 10% during 2025. Andrew Andersen Thanks. And then just on the reserve movement in the quarter 41 million favorable, could you talk about some of the drivers there? Allan Decleir Yeah, I it sound again, I'll start again, the Just to note, as we have previously advised, it's a legal requirement to keep settlement details from the Ukraine, Russia. Events confidential, so we're not able to talk about specifics on any particular case or settlement in that regard. As overall, we're very pleased with our positive prior development for the quarter, 41 million overall, most segments contributing $33 million in reinsurance, and 8 million in insurance. The core driver of our PYD was continuing strong performance of the attritional book, as well as some reserve releases from prior reserves from recent events in 2024. So again, we're very pleased with how the nutritional book is performing as well as some of these events and how they're performing. We did reflect further Russia-Ukraine settlement activity in our results this quarter through PYD as we continue to de-risk the exposure from Russia Ukraine, and we went from 2/3 to 80% settled on those cases. And I would also add that of the 80% that is on a settlement basis, 90% of that has already been paid. Operator Leon Cooperman, Omega Family Office. Leon Cooperman Thank you. Congratulations on your excellent risk management underwriting results in a difficult environment. Frankly, I'm a journalist, so I'm not a specialist. I'm surprised your stock sells at discount to book value. You've repeatedly said in the past that overcycling you expect to earn 13 to 16% in equity. I've looked at all the insurance companies that earn those kind of returns. They also sell at a premium to book value. You're selling a discount to book value. You seem to agree, on the undervaluation given your repurchase activity. Do you have any explanation as to why the discount and what can you do about it? Daniel Burrows Yeah, thanks Leon. Thanks for the question and nice to hear you on the call. I think, yeah, we're in total agreement. We think the business is undervalued given the underlying performance. I think we always knew, with this structure coming to market a couple of years ago, it would take time. I think we're building that out, we're spending more time with our investors, getting them more comfortable. We do see ourselves in a very attractive market. We have 100 different lines of business, very diversified. We're a leader in a verticalized market, so we're able to leverage our position across those lines of business to get the best margin that we can. But ultimately I think we've just got to keep on performing. I think when we look at the wildfire losses specifically, given the size of our property book, property premium, the use of reinsurance to manage our exposures there is another demonstration of the good performance of. Of the portfolio against our peer group, so I think in essence we just keep on doing what we're doing, we can keep on growing in an attractive market, and we obviously believe, the current book prices or the the current stock price is very much undervalued. Leon Cooperman Let me ask you a follow-up question. $105 million is left on your repurchase program if the stock continues to sell at prices in the current area, would you expect to use it this year? Daniel Burrows Yeah, as we had a share repurchase program authorization of $200 million and our strategy is always to balance profitable underwriting opportunities with capital management. So we're in a fortunate position to be able to, our first port of call will always be to put, capital behind profit underwriting, but we are in this privileged position to be able to do that as well as manage capital. At the current share prices, we will be buying back more stock. We're able to add about $0.48 to our, book value per share. So that's a very accretive capital action, we'll continue to do that. Leon Cooperman Thank you. Good luck. Daniel Burrows Thanks very much, Leon. Operator Matt Carletti, Citizens Capital Markets. Matthew Carletti Hey, thanks. Good morning. Dan, I think I heard I think I heard you right that on kind of the 20% of Russia, Ukraine outstanding that most of it relates to the UK. If things go well, there could be some favorable, and if things don't go well, it sounds, I think you said worst case 150 million of of adverse. If that's right, my question is that a kind of probabilistic measure similar to. You know your your current point estimate or is that kind of more of a hard stop in terms of that's the limits remaining, on the policies that remain kind of unsettled. Jonathan Strickle Hey Matt, it's Johnny here. I'll take that one. It's more a hard stop, so that's looking at the worst case if we were to lose in court and the impact from where we're currently reserved on the 15% that would be resolved as a result of the UK trial. That leaves 5% outstanding, and we would expect an insignificant impact to our book depending on where that landed. Daniel Burrows I think, I think for me to simplify things, Matt, other than the English judgment, essentially, this is now behind us. Matthew Carletti Yeah, no, that's super helpful thank you that's all I got, appreciate it. Operator Meyer Shields, KBW. Meyer Shields Great, thanks so much and good morning. From an underwriting perspective, are you assuming that the higher frequency of aviation incidents is random or that there's something there that needs to be factored into expected losses? Daniel Burrows Thanks, Maya. That's a really good question. I think there are, clustering effects that happen from time to time in the market. I think that the important thing is how does pricing, terms and conditions react to that? And I think we've seen a bit of a lag there. I think we all know aviation as a class of business has been under pressure for a number of quarters. We use our position as a leader to leverage our line size and the multi-class offering, so we'll. Offer clients, a broader, policy in terms of we're able to look at, war, the actual hull, etc. Etc. And we manage that through the daily underwriting call so we can do that in real time to leverage our opposition. So we're monitoring it closely, we go to the business that has the highest margin. We will not support any line of business that doesn't hit our hurdle rate, so we, so we're watching aviation, and waiting for, a positive reaction. Meyer Shields Okay, no, that's helpful. Thank you. Second question, in the past, I guess, maybe last year, you talked about viewing property on a primary basis as more attractive than reinsurance, and I was hoping you could update us on your thinking of the relative attractiveness of deploying capital between these two lines. Daniel Burrows Yeah, I think, we, we've talked about the property market direct having combined sort of compound increases since 2018-2019, so we kind of lean into that market. We thought that had superior terms to the reinsurance. We also publicly stated in 2021 rather, we didn't think the market was really pricing on the reinsurance side for climate change or social inflation, that kind of caught up in 202 and since then we Seen attractive margins on both sides, so we continue to grow the DNF portfolio. We've grown in the reinsurance space, pricing has improved, terms and conditions have improved, and we're also able to manage the other side in terms of our buying buying outwards reinsurance to improve the margin. So we're always looking to do that on both sides, get the best possible margin on the inwards, but also use the reinsurance retrocession market as a buyer to improve margin there and certainly when we think about, the kind of three segments, insurance, reinsurance, retrocession, Metro we feel was the most competitive market, so we're able to buy broader cover, more cover than we did last year at attractive terms, which has improved the margin on the inwards. Meyer Shields Okay, great. Thank you very much. Operator Brian Meredith, UBS. Brian Meredith Yeah, thanks. Ian, just a little clarification, the reinstatement premiums. I think you said you had $80 million. Is that just on the reinsurance side? And then what was the impact adverse on the, insurance side? Allan Decleir Yeah, the reinstatement premium is the $80 million substantially all in our reinsurance segment. There was just a minor amount in our insurance segment. Brian Meredith Okay, so really, no, not much in navigation. Okay, that's helpful, and Dan, I'm just wondering if we, if we think about your, DNF book. Property book. Where are we right now with respect to rate adequacy and then, how much? Let's call it, what a returns look like relative to kind of like target range just to get a perspective on, how good the market is right now. Daniel Burrows Yeah, look, I think, 23, 24, I think it's been acknowledged that been, two of the best in underwriting environments in the last couple of decades. This year, we're pretty close to that. I think we see attractive margins in that business. We've seen demand being still strong, business moving from the aitive market into the ENS market. We have a very strong retention rate and we see new business. I think also we've been able to, have a positive impact on our IPIs because we're very nimble post loss. So we don't follow the crowd in our underwriting. We're very much a leader in a verticalized market. We don't really look at the primary, kind of section of the programs, and I think there's been a lot of noise around rate reduction there, especially in the London market, but we're not really a player in the insurance group in the primary. We focus on the excess layers, where we think there's a better margin, and it's still a very strong market. Brian Meredith Helpful, thank you. Operator David Motemaden, Evercore. David Motemaden Hey, good morning, Dan. I was hoping you could just Maybe level set us here just in terms of the RPIs on the the DNF book where they're at now relative to where they were maybe at the beginning of the year and I think you had said it was like a 100 107% so I'm just wondering where they are relative to that. Daniel Burrows Yeah, look, I think as as I've said, we've had compound increases for the last 6 or 7 years. When we look at the overall portfolio, the RPI for 11 was about 104%. And I guess, we've had positive impacts because we are nimble and we will take post-loss opportunities. I say, yeah, BNF is certainly flatter than it has been in previous years, but the margin is excellent and we're also able to improve that margin through our outwards buying. So that's a really important kind of impact on on margin improvement year-over-year as well. David Motemaden Got it thanks any sort of quantification there just on that the outwards buying, what you guys are seeing in terms of. What you guys are paying on that. Daniel Burrows Yeah, I think. Certainly. Yeah, I think when we look at the program as a whole, they, we were getting something like 80% of, so in other words, a kind of 20% reduction, which obviously makes a huge impact on the inwards margin. In fact, we found retro to be the most competitive market, and as a buyer of retro, we don't write retro, that was very positive for us. David Motemaden Got it, yeah, wow, okay, that's helpful. And then, maybe just a question, for Alan just on the the excess capital position I was wondering if you just. You know how you guys are thinking about the excess capital and you know it doesn't seem like you know the the pending outcome of the UK aviation cases has has dented your appetite for doing share repurchases yet this first or yet here in the second quarter, but yeah I guess how does that pending decision impact your appetite for repurchasing stock? Allan Decleir Yeah, thanks, it's Alan. We are, our capital, is strong. We continue to reinvest in the best profitable underwriting opportunities we can find and we still, do pursue those opportunities where they meet our hurdles. In terms of capital management, again, as Dan just touched on, we're always looking at optimizing our outwards reinsurance, and that can really, not only affect the profitability of the book but also be a capital enhancer for us overall. As you say, when we have excess capital, what do we do with it, we will consider returning to shareholders to dividends and buybacks, and the way I think about Our, capital position, as I said, it's strong and we have 103 million remaining under our share repurchase authorization, and we will consider using that if the price is right and on an opportunistic basis throughout 2025. Operator Pablo Singzon, J.P. Morgan. Pablo Singzon Hi, good morning. Maybe first for Dan or Johnny just to follow up on Ukraine here, can you give a dollar amount for the care reserves for presenting claims to the litigation? I think you cleared up the adverse BOD of $150 being a hard stop, but I was just wondering how much can be released if you end up with a favorable court decision. Jonathan Strickle Hey, thanks for the question. It's Johnny here. We haven't disclosed our overall book position for this event or the impacts within the quarter. We still have some exposures going through the legal process and some ongoing settlement discussions. In addition, the settlements we have completed were private and confidential transactions, so it makes it difficult for us to provide detailed information around siting them. I think what we would point to is that over the quarter we've been able to continue to de-risk the book, going from 2/3 to 80% on a settlement basis, as Dan said. We're really pleased with the reduced uncertainty that we get from that and despite doing that, we still delivered favorable PYD overall in the quarter. Operator Alex Scott, Barclays. Alex Scott Hey, good morning. Wanted to see if you could talk about the competitive environment and property. We're obviously hearing a lot about softening, I heard your comments in the prepared remarks that were just mentioning you're already beginning to price in, potential impacts from tariffs into the property book and. I guess I hadn't necessarily heard some of that same commentary from other primaries on the property side. It didn't sound like maybe they were doing it as real time as more of a wait and see approach. So I was just wondering like what are you seeing in the competitive environment? Are you able to, still get the kind of growth you're looking for but still being disciplined around, some of those adjustments you're making. Daniel Burrows Yeah, thank, thanks for that. I think, as a reminder across the whole portfolio, it's a very short tale book, so we're able to implement, what we see as the effects of potential, tariff tax. So, when we think about it, that would be inflation, credit risks, effects on GDP so demand, rebuild cost, supply chains are all things to kind of factor in. And it's about the power of the daily underwriting call, we get everyone together, we have an information loop with the claims team, legal underwriting, analytics factories all sit on this call every day, which allows us to price and shape the portfolio in real time. So we, where we can enhance coverage through an evolving view of risk, we can do that immediately, and that's already started happening on classes like the DNF book. We've incorporated changes quickly, and as I said earlier, we are seeing more demand coming again from the admitted market to the ENS, so we're able to take advantage of that. We see, inflation. Historically has always driven more demand. So as a leader in that market we see deals before other people. We get our terms and conditions out, we cross sell. We have one very large US corporate where we're able to support the property, the terror, although we don't write casualty partnership do. So again that gives us. Kind of a benefit without actually being exposed to casualty, because, we're giving the client a very broad solution, but yeah, we're seeing opportunity in that market. And again, we have 100 different lines of business, over 100 different lines of business. When we think about some of the bespoke products we have in specialty, historically they've they've never really been impacted by the regular insurance cycles, so we're very positive on the outlook for the future. Alex Scott That's helpful. Second question I have is on the combined ratio that you've talked about in the past sort of being in the mid to high 80s and I know there's been a lot of volatility so you know I think we have to strip away some of. You know what's what's happened in the last couple quarters certainly so may maybe it's, call running around the high 80s excluding sort of aviation in the wildfire. I mean, is that the right way to think about it? Is that sort of where you feel like you're running right now because I'm just trying to think about if that's the goal in this environment, as you mentioned, I think a few different times is very favorable for you right now, even if it deteriorates a little bit maybe as favorable as it's going to get so are we sort of already run rating in that zone, and you know if if that's the case. How do you weigh that opportunity versus buybacks because you know you're talking about taking, I think, less net, buying back more stock, and I get it your stock's cheap, but you know those kind of combined ratios, I would think be generating very strong risk concerns as well. Daniel Burrows That's a great question and great points within the question. I think, as I said earlier, our strategy is always to balance profitable underwriting opportunities and strategic capital management, and we've got a strong balance sheet and the capital to do both. So when we think about Q1, it's the worst quarter for net cap losses in over a decade, but it is still a very good trading environment, and given that and given the underwriting talent that we have, we are confident in our targets. So as you say, we can get to 13 to 15 ROA throughout the cycle with a combined ratio of mid 80s to high 80s, and we can execute the 10% growth. So we can do that alongside our strategy strategic capital management, which we've demonstrated quarter-over-quarter, that we're willing and able to buy back shares and support good underwriting opportunities in the market. Alex Scott Got it. Okay. Thank you. Operator Pablo Singzon, J.P. Morgan. Pablo Singzon Hi, thanks for taking me. So Dan, I heard your comments about Filas having a lead position on property deals and how capacity of proper layers tend to get hit for price compression. So I think most people who myself recognize that property margins are so strong in the current market, but what I'm more interested in is how pricing trends, which I presume are not as strong as they used to be, might impact topline growth. So your property pres something like 30% last year. A relative to the 10% premium portfolio number that you put out for this year, do you think property falls above or below that? Thank you. Daniel Burrows Yeah, thanks. That's a good question. I think, we'll. We look to maximize the opportunity in front of us, so, probably DNF has as an LPR has been flattened in previous years. Over the last 2 or 3 years we've had substantial growth, so. We also see op opportunity in the reinsurance treaty market, so we want to be nimble between the two, but we want to remain a leader in that market. I don't particularly want to put a number on it in the first quarter, but we do see opportunities to grow in line with our overall growth prospects for the year. Operator Mike Zaremski, BMO. Michael Zaremski Hey, thanks. Good morning. Couple probably quick ones, just a clarification on the California wildfire update. You say net of expected recoveries is, what do you mean by recoveries? Is that subrogation or, if you can clarify. Yeah, good, good. Allan Decleir Question, Mike, it's Alan here. Now, by net of recovery you mean outward reinsurance recoveries. Again, as in our insurance book, we buy outward reinsurance coverage for about 40% spending 40% of our premium dollars in outward reinsurance protection and then reinsurance 50%. Not saying it's pro rata for that. We do spend a lot on outward reinsurance and so that's net of those awards Collections. Michael Zaremski Okay, got it. I figured I just want to make sure, maybe a a more macro question. I think in the prepared remarks you talked about, construction being strong, and I guess when we look at just, very high level US, construction spend data, it looks like, the construction market. Is growing much slower. Just want to, are you guys, you think, taking market share, maybe you're writing more global, construction, any additional commentary. Daniel Burrows Yeah, I think it's a bit of confusion there. The comment around construction is marine construction. So we write a lot of yard business, we're seeing people spending more on defense, their military vessels. There's a huge pipeline for that. We're also seeing more cruise ships. So it's not referring to US property construction, that comment was referring to construction within the marine market. Michael Zaremski Okay, interesting, and then lastly, on, you talked about, expected, rate increases, in, at mid-year on I believe loss impacted accounts, just kind of curious at a high level, is what percentage of the market is was was loss impacted over the last year? Is it a very small percentage or is it a. Meaningful percentage just others have said the same thing and wasn't sure how to size it up. Daniel Burrows I think you've got 3 events, haven't you? Helaine Milton, wildfire, I think that would be different depending on the individual losses. You tend to see what we've seen is appropriate adjustments for loss impacting covers, and I think, for non-impacted covers, we've seen a dampening kind of pressure on rating there. But we're obviously we're in mid mid-year renewals now, so it's not really appropriate to comment on that at the moment. Yeah, I think we've seen the proper, appropriate adjustments. On the back, and remember this is on the back of years and years of compound improvement, so you know it is, that's what makes it such a compelling underwriting environment. Michael Zaremski Okay, yes, understood, thank you. Operator Rob Cox, Goldman Sachs. Rob Cox Hey thanks the first question was on the the tariff impacts appreciated you all sharing your analysis, and I thought it was interesting that the analysis pointed to inflationary impacts from from tariffs being more meaningful for long tail casualty lines of business, so I was hoping you all could unpack the underlying drivers or or reasons for that conclusion. Daniel Burrows Yeah, I just think, when we have a short tail account, and as we attach risks looking forward, we're able to price in, and kind of look into the insured values much more difficult to do with a legacy portfolio that you actually bound 4 or 5 years ago, 10 years ago. So I think it's widely acknowledged in the market. There's been a lot of reports that the biggest impact will be on the casualty lines, motor liability, etc. Etc. But we will see, Kind of supply chains, effects on demand, rebuild costs, affects, property post loss, but we're able to factor that in now, and that's the difference between, legacy portfolios and risk attachment going forward. Rob Cox Thanks that makes sense. And then I also wanted to ask on the Fideli partnership seating commissions, those came down about a point year-over-year. I was wondering if that was driven by business mix and how sustainable that is. Allan Decleir Yeah, thanks, Robert Allen. Absolutely. We, as there's several components to the commission. We pay the partnership, a seating commission, a portfolio fee, and as well as a profit commission. There is a, in the seating commission line itself, there is some mixed adjustment going on, and as we mentioned before, in their book of business, they also have the Pine Walk incubator. Calves and those companies have a slightly different. Commission rate than the main business that they rate so that can affect the the amount of city commission we pay. Rob Cox Okay, got it, thank you. Operator Leon Cooperman, Omega Family Office. Leon Cooperman Just listening to you, Dan, speak and your colleagues, it seems to me that what you're saying is that if you think that 13 to 60% ROE is reasonable over a cycle, that we're in an environment now where you can do better than that because pricing is as good as you've ever seen since you've been in the business. Daniel Burrows Yeah, I think we, as we say, just to reiterate, that's our target through the cycle. We have had, one of the worst first quarters for cats in over a decade, but it is a very good trading environment just, to outperform, as in any other year, you need a kind of beat your loss ratio plan for the year. It's possible, but we have a difficult start to the year, but we are in a very good trading environment. Leon Cooperman Let me ask you, I don't know enough about this, so I got to be very careful the way I phrase the question. There seems to be some question about the nature of the structure with you you're relying upon an outsider to, present you with underwriting opportunities. You obviously think that's going to work, but is there a period of time, and I think what you said before is accurate, and it takes 5 years to have a 5 year record. So people are just, not yet comfortable with the structure. But if you reach the conclusion that the market just won't accept that structure, are you prepared to revisit that whole issue? Daniel Burrows No, I think we feel it's working exactly as it should be, exactly as it planned. We can put the right capital to the right risk. Richard and the team are, have a fantastic track record, the best underwriting team in the market, we feel, and best people, best placed to get us the business we want with the best margin. There are opportunities with other partners as well, and explore those over time. We do have. We have on boarded a couple of partners already, Eli Mortgage. That's going well. So, the partnership will always be our core engagement, our core partner, but there are opportunities beyond that as well. But they are best placed in this market we think to deliver, help us deliver the through the cycle of financial metrics. Leon Cooperman Alright, well, I think it's probably a more elaborate answer to that question, but I'll take that offline. Very good, thank you. Operator Meyer Shields, KBW. Meyer Shields Great, thanks so much. I suspect this is for Alan. I was just wondering whether we can get the net earned premium impact of the reinstatement so we can sort of see underlying excluding that. Allan Decleir Hi Meyer. Yes, it's Alan. Yeah, as I mentioned earlier, the gross premiums for reinstatements were $80 million almost all of it in the reinsurance segment. We also pay reinstatement premiums to our reinsurance partners on the outwards business, and the net of the two was approximately 20 million. Michael Zaremski Perfect thank you so much. Operator Thank you. That concludes today's question and answer session. I would like to turn a call back over to Dan Burrows for closing remarks. Daniel Burrows Thank you very much and we appreciate everyone joining us today and if there are any additional questions, we're here to take your calls. Thank you for ongoing support and I'll send it over to the operator to wrap up the call and I hope you enjoy the remainder of your day. Operator Thank you. That concludes today's conference call. Thank you for your participation. You may. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-05-2025
- Business
- Yahoo
Fidelis Insurance: Q1 Earnings Snapshot
PEMBROKE, Bermuda (AP) — PEMBROKE, Bermuda (AP) — Fidelis Insurance Holdings Ltd. (FIHL) on Wednesday reported a loss of $42.5 million in its first quarter. On a per-share basis, the Pembroke, Bermuda-based company said it had a loss of 38 cents. Losses, adjusted for non-recurring gains, were 41 cents per share. The insurance and reinsurance company posted revenue of $658.4 million in the period. Its adjusted revenue was $652.5 million. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on FIHL at
Yahoo
14-05-2025
- Business
- Yahoo
Fidelis Insurance: Q1 Earnings Snapshot
PEMBROKE, Bermuda (AP) — PEMBROKE, Bermuda (AP) — Fidelis Insurance Holdings Ltd. (FIHL) on Wednesday reported a loss of $42.5 million in its first quarter. On a per-share basis, the Pembroke, Bermuda-based company said it had a loss of 38 cents. Losses, adjusted for non-recurring gains, were 41 cents per share. The insurance and reinsurance company posted revenue of $658.4 million in the period. Its adjusted revenue was $652.5 million. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on FIHL at
