Fidelis reports GPW growth but large losses dent Q1’24 underwriting income

Fidelis Insurance Holdings Limited, a Bermuda-domiciled re/insurer, has reported underwriting income of $69.2 million, with a combined ratio of 85.8% for Q1 2024, compared to $80.6 million and 79.1%, respectively, for Q1 2023, as the firm’s gross premiums written (GPW) for the quarter increased 21.6% to $1.5 billion.

Alongside growth in GPW, the re/insurer has reported year-on-year growth in net premiums earned from $386 million to $488 million.

Catastrophe and large losses increased by more than 360% to $103 million in Q1 2024, although this was somewhat offset by an increase in net favourable prior year reserve development to $67 million, compared with $2.1 million in Q1 2023.

Net investment income for Q1 2024 was $41 million compared to $20.4 million a year earlier.

As a result of the higher catastrophe load, the firm’s combined ratio deteriorated to 85.8%, but remains strong, while the ROE reported was 3.6% or 14.4% annualized in the quarter, compared to 5.2%, or 20.8% annualized in the prior year period.

Group-wide, Q1 2024 net income hit $81.2 million, or $0.69 per diluted common share, alongside an operating net income of $87.3 million, or $0.74 per diluted common share. In Q1 2023, net income was $1.73 billion and operating net income amounted to $93.7 million.

In the company’s reinsurance segment, GPW increased by $66.4 million to $326.8 million, driven by rate increases as well as new business. Net premiums written (NPW) increased by $12.6 million to $97.6 million, and net premiums earned (NPE) rose by $17.3 million to $45.9 million.

Within reinsurance, losses and loss adjustment expenses increase by more than $21 million to $15.6 million, as the loss ratio improved by 54.3 points as a result of an 83.8% reduction in the attritional loss ratio on the back of very low loss activity in the period.

The reinsurance arm’s underwriting income increased significantly from $17.4 million in Q1 2023 to $55.4 million in Q1 2024, as the underwriting ratio improved by 59.9 points as a result of the decrease in the loss ratio.

In the specialty segment, Q1 2024 GPW increased by almost $200 million to more than $1 billion, driven by growth from new business and improved rates in its Property D&F, Property and Marine lines of business. NPW increased by over $134 million to $628 million, and NPE increased by $86 million to $352 million, as the quarter benefited from the earnings from higher net premiums written in the prior year.

Within specialty, losses and loss adjustment expenses rose by $33.8 million to $174.5 million in Q1 2024, as attritional losses increased by $19.2 million to $111 million, and catastrophe and large losses rose by almost $80 million to $98 million. Fidelis notes that large losses in Q1 2024 included $51.2 million for the Baltimore Bridge collapse in its Marine line of business together with other smaller losses in various lines of business including Aviation and Aerospace, Marine, and Property D&F.

Despite the higher losses, the segment’s underwriting income improved from $59.2 million in Q1 2023 to $77.9 million in Q1 2024.

In the company’s Bespoke segment, GPW rose slightly to $153.5 million, as NPW fell by almost $29 million to $52.8 million, and NPE declined by $1.3 million to $89.9 million.

Losses and loss adjustment expenses in the bespoke business increased by more than $10 million year-on-year to $23.4 million, with an $8.6 million increase in attritional losses to $27.5 million, and a slight increase in large losses to $4.2 million. All in all, the segment’s underwriting income declined by $8.6 million to $36.2 million in Q1 2024.

Dan Burrows, Group Chief Executive Officer, Fidelis Insurance Group, commented: “2024 is off to a very strong start as we build on our momentum from 2023 and continue capitalizing on attractive market opportunities. In line with our expectations, we delivered strong underwriting performance including 21.6% growth in gross premiums written and a combined ratio of 85.8%. Additionally, we achieved an Annualized Operating ROAE of 14.0% and grew our book value per diluted common share to $21.22.

“As we look ahead to the rest of the year, we will continue to leverage our scale, deep relationships, and lead positioning to further grow our business. Our fundamentals are excellent, we have a strong pipeline of opportunities, and we are leaning in across attractive lines where we expect to generate increased underwriting profitability. Coupled with our proactive and disciplined approach to investment and capital management, we believe we are well positioned to continue delivering compelling returns through the cycle and creating value for our shareholders.”

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