NYSE:FIHL Fidelis Insurance Q1 2024 Earnings Report $16.12 +0.13 (+0.78%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$16.16 +0.03 (+0.19%) As of 04/17/2025 05:51 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Fidelis Insurance EPS ResultsActual EPS$0.74Consensus EPS $0.75Beat/MissMissed by -$0.01One Year Ago EPSN/AFidelis Insurance Revenue ResultsActual Revenue$520.00 millionExpected Revenue$585.88 millionBeat/MissMissed by -$65.88 millionYoY Revenue GrowthN/AFidelis Insurance Announcement DetailsQuarterQ1 2024Date5/9/2024TimeAfter Market ClosesConference Call DateFriday, May 10, 2024Conference Call Time9:00AM ETUpcoming EarningsFidelis Insurance's Q1 2025 earnings is scheduled for Wednesday, May 14, 2025, with a conference call scheduled on Friday, May 9, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Fidelis Insurance Q1 2024 Earnings Call TranscriptProvided by QuartrMay 10, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the Fidelis Insurance Holdings First Quarter 2024 Earnings Conference Call. As a reminder, this call is being recorded for replay purposes. Following the conclusion of formal remarks, the management team 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. Operator00:00:27Hunter, please go ahead. Speaker 100:00:29Good morning, and welcome to the Fidelis Insurance Group's Q1 of 2024's earnings conference call. With me today are Dan Burrows, our CEO and Alan DeClair, our CFO. 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. These risks and uncertainties are described in our 2023 Annual Report on Form 20 F filed with the SEC on March 15. Speaker 100:01:05Although we believe that the expectations reflected in forward looking statements have a reasonable basis when made, we can give no assurance that these expectations will prove to 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 also review periodic reports that are filed by us with the SEC from time to time. Management will also make reference to certain non GAAP measures of financial performance. Reconciliations to US GAAP for each non GAAP financial measure and our definition of RPI, which is our Renewal Pricing Index, can be found in our current report on Form 6 ks furnished to the SEC yesterday, which contains our earnings press release and is available on our website at idelisinsurance.com. Speaker 100:01:55And with that, I'll turn the call over to Dan. Speaker 200:01:58Thank you, Miranda. Good morning, everyone, and welcome to Fidelis Insurance Group's Q1 earnings call. I'm very pleased to report that we delivered a strong start to the year as we successfully capitalized on the continued mature odd market conditions, leaning into our core lines, achieving sustained profitable growth, leveraging our lead position to generate house results and broadening the footprint of our business. In the Q1, we increased gross premiums written by 21.6% and delivered a combined ratio of 85.8%, both of which were in line with our expectations. These excellent results reflect our strong underwriting and risk selection capabilities across our growing and well diversified book of business. Speaker 200:02:44We continue to see positive pricing across our portfolio with an RPI for the Q1 of 112 percent, demonstrating our ability to achieve preferential terms in a verticalized market. We delivered another strong quarter of return with an annualized operating ROAE of 14%, again in line with our expectations. We also grew book value per diluted common share to $21.22 For the full year, we remain on track to generate ROAE in the 14% to 16% range as we earn a greater portion of our capacity exposed premium in the second half of the year. As our results demonstrate, our strategy and structure are working exactly as intended. We have the flexibility, discipline and market access to deploy capital where we believe there are attractive risk reward opportunities in what continues to be the best market we have seen in decades. Speaker 200:03:43We are leveraging our scale, lead positioning and deep relationships with brokers and clients to grow our business and have constructed a diversified portfolio of short held specialty risks, which we believe is well positioned to deliver combined ratios in the mid to high ACs throughout the cycle. And as a reminder, we do not write casualty lines. The strength of our strategy is the daily underwriting calls, which were attended by all underwriters at both the Fidelis Insurance Group and the Fidelis Partnership. These calls provide insight across our entire portfolio, giving a forum to discuss our offering on each individual risk. They enhanced our ability to cross sell across target lines and help us quickly respond to market dynamics and capitalize on areas of opportunity. Speaker 200:04:33We continue to see opportunities across our core lines, with Property Direct and Facultracy being a great example where we delivered growth of 36.5% compared to prior periods. And we are capitalizing on attractive pricing within our broader specialty portfolio. In the Q1, we announced our participation and investment in the new Lloyd's Syndicate 3,123 with the Fidelis partnership, executing our capital and underwriting strategy and broadening the footprint of our business. For the targeted launch date of July 1, this vehicle is expected to add to our long term growth by providing access to enhanced ratings platform, global licensing and Lloyd's only business. The syndicate all right business across multiple insurance and reinsurance classes and will be an extension of our strategy to leverage our expertise to take these positions. Speaker 200:05:27Today's insurance group will be taking a variable credit share across the portfolio, which enables us to access additional business channels that align to our current risk appetite. This is a perfect example of why our underwriting relationship with the Fidelis partnership works so well. Our long term agreement was designed to enable us to match the right risk with the right capital. Exercising our right of first refusal with this variable purchase there allows us to do just that, participating in the lines where we have more risk appetite. As we consider industry events in the quarter, we wanted to touch on the March 26 Baltimore bridge collapse, which will impact the specialty insurance market. Speaker 200:06:09Given the complexity surrounding the event, it could take years to fully resolve. We continue to monitor developments and believe any loss resulting from the bridge collapse will be manageable within our diversified portfolio. So in summary, I'm very pleased with our Q1 performance, which positions us for another year of strong profitability growth from Midtown. With that, I'll pass it over to Alan to walk through our financial results in more detail. Speaker 300:06:36Thanks, Dan. And I'd also like to welcome everyone joining our Q1 earnings call. As Dan mentioned, we had an excellent first quarter to operating net income of $87,300,000 or $0.74 per diluted common share and an annualized operating return on average equity of 14%. Our book value per diluted common share at March 31 was $21.22 Looking at our gross premiums written, we had excellent top line growth of 21.6 percent in the quarter to $1,500,000,000 compared to the Q1 of 2023. This was driven in large part by the Specialty segment, which grew by $199,900,000 or 24 percent to $1,000,000,000 dollars This is consistent with our expectations for growth to be broadly in line with what we saw last year. Speaker 300:07:24Specialty growth was primarily driven by property B and F, which saw an increase of $62,400,000 or 36.5 percent from the prior year period, benefiting from the continued strong rating environment and new business. The growth is in line with the overall 38.7% growth we saw in its class across 2023. Other drivers of growth within our specialty book in the quarter included other property, which saw an increase of $55,700,000 and marine, which saw an increase of 49,900,000 dollars As a reminder, there is seasonality within our specialty book with Marine and Aviation and Aerospace being more heavily weighted to the first half of the year, while in property D and F, which we expect to be the key driver of specialty growth this year, we anticipate a more even distribution of premium across the quarters. Bespoke premiums were consistent with prior period, with 1st quarter gross premiums written of $153,500,000 an increase of 1.8 percent versus prior year. Our Reinsurance segment grew by $66,400,000 or 25.5 percent, driven by property reinsurance. Speaker 300:08:32As Dan discussed in our year end call, we write approximately a third of our reinsurance book at oneone, and in 2024 we saw strong oneone renewals achieving RPIs of 118%. Looking ahead, premiums from the New Lloyd Syndicate 3,123 variable quota share and our 9.9% investment in the syndicate will flow through each of our 3 segments. Our participation in the syndicate won't materially impact our expectations for growth this year. On a net premiums earned basis, we delivered an increase of 26.4 percent from the prior year to $488,000,000 in the Q1 of 2024, consistent with our growth in gross premiums written. As noted by Dan, our premiums are not earned on a straight line basis, with property catastrophe premiums more heavily weighted to the back half of the year. Speaker 300:09:26Our excellent underwriting performance resulted in a combined ratio of 85.8 percent for the Q1, which included a loss ratio of 37.4%. This 37.4% is composed of attritional losses, catastrophe and large losses, and prior year development. Looking at attritional losses, in the Q1, we had $146,300,000 or 30 percent compared to $139,500,000 or 36 percent in the prior year period. Capacity and large losses for the Q1 were $103,000,000 which includes a $51,200,000 provision for the Baltimore Bridge collapse. In addition to other IBNR and smaller events in various lines of business, including Aviation and Aerospace, Marine and Property D and F. Speaker 300:10:14Specific to the Baltimore Bridge class, our exposure is in line with our market position. We anticipate that any settlement will take a few years to play out and as such, we have set our provision based on a probabilistic model. We had net favorable prior year development of $67,000,000 for the quarter versus $2,100,000 in the prior year period. Of the $67,000,000 for the quarter, specialty was $34,400,000 dollars reinsurance was $24,300,000 and bespoke was $8,300,000 and this was all primarily driven by better than expected loss activity. Turning to expenses. Speaker 300:10:53Policy acquisition expenses from 3rd parties were 27.9 points to the combined ratio for the quarter, consistent with the prior year period. The Fidelis partnership commissions were 15.7 points to the combined ratio for the quarter, of which 1.8 points related to accrued profit commissions due to the strong underwriting results in the quarter. And finally, our general and administrative expenses were 4.8 points to the combined ratio for the quarter compared to 4.3 points of the combined ratio in the prior year period. Looking now at investments. Net investment income increased to $41,000,000 for the Q1 of 2024 compared with $20,400,000 in the prior year period. Speaker 300:11:36During the Q1 of 2024, we sold $201,200,000 of securities with an average book yield of 0.9 percent, resulting in a realized loss of $7,400,000 We reinvested the proceeds in securities with an average purchase yield of approximately 4.9%. At March 31, 2024, the average rating of fixed income securities remains very high at AA- with a book yield of 4.2%. Duration has lengthened slightly to 2.2 years. Turning to capital management, we remain committed to maintaining a strong balance sheet. As I mentioned last quarter, our capital management strategy includes: 1st, allocating capital to support and grow our business in attractive segments of the market 2nd, using Outward's reinsurance as a flexible and aligned source of capital and finally, returning excess capital shareholders through a combination of share buybacks and dividends. Speaker 300:12:38Specifically, during the Q1, as we mentioned, we grew our premiums and targeted lines seeing overall premium growth across our book of 21.6%. Regarding outwards reinsurance, we sponsored 2 new tranches of our Herbie REIT catastrophe bond for $150,000,000 of protection to cover earthquake and main storm events in the U. S, enhancing our overall outwards program. And we returned $16,800,000 to shareholders through $11,800,000 of common dividends and repurchases of $5,000,000 Subsequent to March 31, we have repurchased another $8,300,000 of shares. As of today, we have $36,700,000 remaining in our share repurchase authorization. Speaker 300:13:25In summary, I am very pleased with our excellent financial performance in the Q1 of 2024. Looking ahead, we are confident about the future as we continue to focus on delivering profitable underwriting and book value growth. I will now turn it back to Dan for additional remarks. Thanks, Alan. Speaker 200:13:44As you can see, we entered 2024 in an incredibly strong position. We are operating in a sustained hard market with attractive levels of pricing across our portfolio, and our strategy remains to actively capitalize on the significant opportunities this presents. Taking a closer look at our segments. In Specialty, which is our largest, conditions and pricing remain attractive across our core lines. And in the Q1, we achieved Specialty RPIs of 111%. Speaker 200:14:15As a reminder, our key drivers of specialty are property, direct and facultative, marine and aviation and aerospace. And our aim is to be a top 3 market for these classes. Our appetite for property direct and facultative has increased since late 2019 in response to attractive pricing levels, driven by the frequency of natural catastrophe and climate driven events and the exit of a number of larger carriers. Following a $120,000,000,000 of natural catastrophe losses in 2023 and an active start to 2024, including several U. S. Speaker 200:14:53Severe weather events, the market has remained dislocated with increased demand and no new meaningful supply of capital coming in. We continue to see attractive opportunities to deploy capacity across this key line of business, in line with our targeted risk selection approach, and we are pleased with the continued strong performance of this line during the quarter. Marine also remains a significant market for us, where we're able to leverage our leadership position to cross sell and set pricing, terms and conditions across multiple lines. We are seeing particularly attractive opportunities in large marine construction where significant capacity is acquired. We've had several new business wins this year. Speaker 200:15:38We pride ourselves in our ability to innovate, enabling us to offer meaningful solutions to our clients. We are an established leader in the classes we participate in, always looking to create powerful performance. Looking ahead, the specialty market continues to offer growth across our four lines at attractive returns, and we expect Specialty to continue to contribute to our growth throughout 2024. In Bespoke, our established relationships with clients and brokers along with our underwriting expertise enabled us to maintain our position as an industry leader, particularly when considering the high barriers to entry for others given the nature of the underlying risks. The unique nature of this business results in a less commoditized, more tailor made product that delivers low volatility underwriting performance with less exposure to typical market cycles. Speaker 200:16:33Given the highly tailored nature of this portfolio, premiums do not follow a regular predictable schedule. The Q1 was a solid start for the portfolio with premium in line with expectations. Looking ahead, our pipeline of structured risk transfer and political risk deals for the Q2 is in line with the prior year period, and we expect opportunities to continue for the rest of 2024. Finally, in Reinsurance, we continue to execute our strategy of deploying capacity at targeted attachment points with 4 clients, and this was an excellent quarter for this segment. Rate remains attractive following an enhanced pricing environment and adjustment of terms and conditions over the past few years. Speaker 200:17:17And we were able to achieve higher rate increases across our portfolio given our thoughts and price leadership. RTI for the quarter was 118% and was the main driver for premium growth year on year. Continue to see clients looking to buy more limit in the U. S. And Europe, where our ability to offer private layers helps us secure our platform programs. Speaker 200:17:40And whilst we are beginning to see an uptick in demand, there's been no major influx of new capacity. We continue to manage our portfolio in line with our view Speaker 300:17:49of risk and are happy Speaker 200:17:50with our position heading into the rest of the year. And briefly on fourone, we saw positive rate movement continuing in April, where our portfolio is driven by Japanese future renewals. We continue to enhance our broad and established relationships in the region to create opportunities and are pleased with the growth in our portfolio. As we look ahead to the rest of the year, we are focused on deploying capital, the best underwriting opportunities, and will further enhance our efforts to deliver consistently compelling returns through the cycle and create value for our shareholders. One example is the new Lloyd's syndicate, which opens the door to exploring additional opportunities within Lloyd. Speaker 200:18:33And longer term, we believe this will lead to broader opportunities globally as we continue our focus on aligning our capital to the right risk. In closing, 2024 is off to an excellent start. We are pleased with the momentum we had coming out for the Q1 and are ready to capitalize on opportunities across our portfolio. We are confident in the outlook for our business and remain on track to deliver operating ROAE in the 14% to 16% range for the full year, which is above our long term target. We continue to see growth potential in the current market and our scale, repositioning, balance sheet strength and expert execution from our dedicated teams positions us well to deliver sustainable, long term profitable growth and create meaning value for our shareholders. Speaker 200:19:21With that, I'll turn it back to the operator. Operator00:19:26Thank you. We will now begin the question and answer session. Please rejoin the queue. With that, our first question comes from the line of Matt Carletti with Citizen JMP. Your line is now open. Speaker 200:20:14Thank you. Good morning. I was hoping to start with Speaker 300:20:20very well, yourself? Speaker 200:20:23Yes, good. Thanks. Speaker 400:20:24Great. I wanted to start, I guess a 2 part question on the Baltimore bridge loss. I guess, one, if you could give us a little more perspective on kind of how you set that loss reserve, specifically if you can what your view of industry losses or if you've been able to kind of translate those terms? And then secondly, just what impact do you think that loss might have on the related particularly marine but related markets? Speaker 500:20:52Thanks for the question, Matt. I think firstly, we look at Baltimore and say it's within expectation given our market profile. As you know, we take a standard reserving approach. We would weight limits against the full range of probabilistic outcomes. We've written over $1,000,000,000 of specialty in the quarter. Speaker 500:21:12So we think, therefore, the loss to any loss is very manageable within that sort of diversified portfolio. But it's very complex and it's very early. So I think to talk about to the second part of your question, how we think about it will impact the market, we'll just wait for it to develop and see what the impact to the market will be in the future. I just think it's too early to think about exactly how pricing will be affected. Speaker 400:21:36Okay, fair enough. And then maybe just a modeling follow-up question. Policy acquisition costs by segment had some variation and you referenced mix of business and some reinsurance ceding commissions. Is there any is it just kind of quarterly to quarterly fluctuation there? Or is there anything kind of more forward looking we should think about? Speaker 400:22:00I guess asked in other ways or any reason to think kind of where we sat by segment on like a full year 'twenty three level, it would look materially different for full year 'twenty four? Speaker 300:22:13Hi, Matt. Thanks for the question. It's Alan. No, I think you have the right answers. One important factor to always consider in our book of business is that we do buy a significant amount of outwards reinsurance and that can also significantly impact the post acquisition costs on a quarter to quarter basis. Speaker 300:22:33If it's quarter share business that we buy on an outwards basis, there can there is a ceding commission and a profit commission that comes back to us. So it can fluctuate quarter to quarter depending on mix of business that is written and earned in the quarter. But I think overall the rate the run rate in the Q1 and in 2023 is the way to think about it. Speaker 200:22:55Okay, great. Thank you. Appreciate it. Operator00:23:00Your next question comes from Mike Zaremski with BMO. Your line is now Speaker 600:23:07open. Hey, hi. Great. Good morning. Just following up because I think some of us are trying to track all the what each company is thinking on the Baltimore bridge losses. Speaker 600:23:22So are you so some companies have said like the range is $1,000,000,000 to $3,000,000,000 they're reserving at the upper end. Just curious if you wanted to provide any kind of color on that. If not, I can just move on to the next question. Speaker 500:23:36Yes. I think when, as I said, we weigh against all of the probabilistic outcomes. And I think if you think at the top end of our range, it will be bang in line with the commentary you've heard from some of our peers. Speaker 600:23:50Okay. Got it. Okay. So just switching gears to a lot of talk in recent months about property pricing, power decelerating, but still increasing and coming off of record levels in many cases. I'm looking at some of your RPI KPIs that are helpful. Speaker 600:24:13Is that directionally, it looks like that's what you guys are also seeing. I don't think bespoke RPIs broken out as often. But what's your thought process and kind of pricing power in the overall marketplace? Speaker 500:24:29Yes. Thanks, Mike. It's a really good question. Firstly, on Bespoke, because of the nature of that product line, it tends to be more insulated against market cycles. So we do see some improvement in terms on some of those lines. Speaker 500:24:43But generally, it's kind of flatter as opposed to the reinsurance and the specialty. But when we think about market duration, it's still the best or pricing in the market, still the best market we've seen for 20 to 25 years. We've had compound increases over the last 3 or 4, 5 years. It's still a very verticalized market. We talked about this before. Speaker 500:25:04So not everyone starts in the same place. So as a leader on across the portfolio, about 90% of the business, then we're able to dictate terms, conditions and we get better pricing, better coverage. And obviously, we see the opportunities early as well. So we're able to have, we think, a better risk selection on that basis. But we're still seeing positive movement. Speaker 500:25:25There's a lot of demand in the market. And despite those secular factors that we talked about long and hard, climate change, catastrophe reserves, inflation, there's really been no new influx of significant capacity into the market. But inflation is driving demand, and we've seen that. So having that lead line that's scalable, it gives us leverage, we're important and relevant to brokers and clients, and that's how we get the differential terms. That's what creates the alpha. Speaker 600:25:58That's helpful. And just lastly, just on the share authorization. Stocks outperformed meaningfully since you announced that. Just anything we should think about in terms of how you all kind of are going to pace it going forward based on valuation? Speaker 300:26:21Hi, it's Alan. Thanks for the question. No, I think when we announced the program in the latter part of December 2023, there was a $50,000,000 buyback program. We said we'd be measured, but certainly at the values of our shares, it was certainly accretive to shareholders. I think given our current $21.22 book value, we could still continue executing on the program throughout 2024. Speaker 300:26:48There's a 12 month authorization. So I think the pacing was right. And I think we will be in the market depending on share price and whether it's accretive to book value. Speaker 600:27:01Thank you. Operator00:27:05Your next question comes from Yaron Kinar with Jefferies. Your line is now open. Speaker 700:27:11Thank you. Good morning. I want to start with the bespoke segment, if we could. You offered some very helpful guidance last quarter talking about a pipeline that was relatively flat year over year. I think where there is still a Speaker 200:27:26bit of Speaker 700:27:27fluctuation is on the session rate there. And I'm guessing it's because the book is essentially all new as opposed to renewed every quarter and therefore, you can see pretty significant fluctuations. But is there any, I guess, guidance or rule of thumb you can offer us in terms of thinking of what a proper seeding rate should be there, A. And B, maybe you can talk about maybe the differences in the composition of the portfolio year over year that would have resulted in the change in session rate? Speaker 500:28:02Thanks, Sean. It's a great question. So it's Dan. I'll start. I think specifically, this is about business mix and the difference in session rate this time was around a cyber relationship that we have, and we buy a lot of proportional reinsurance on it. Speaker 500:28:19And Alan said earlier, we see that as a very fungible form of capital that helps scale our line and really gives us leverage as a leader. But in that particular instance, it's because we're seeking out premium because of the scale of the proportional program that we buy on it. Speaker 700:28:36Okay. And is there a way for us to think about like is a 50% session rate a reasonable number to think about going forward? Obviously, there's going to be some fluctuation quarter to quarter, but just want to make sure we're thinking about it correctly. Speaker 300:28:52Thanks, Yaron. It's Alan. Yes, as you mentioned at the start of your question, the bespoke segment by its nature has some fluctuations on the business we write and they tend to be unique. They're not necessarily all renewals. But in general, I would go with the we would go with the sort of 2023 overall yearly session rates, which we think of as more in the 40%, maybe as high as 50%, again, depending on type of deal. Speaker 300:29:18But it'd be more around the range of 40% session. Speaker 700:29:22Got it. Thanks. And my second question, I realize it's maybe my 3rd, but I'll try it anyway. The timing of reserve reviews, this is a very significant release this quarter. I think the largest disclosed quarterly release that I remember. Speaker 700:29:41Can you maybe talk about what drove that specifically and maybe how you look at the reserves over the course of the year as well? What books are reviewed? Speaker 300:29:53It's Alan again. I'll take that question. For context, I would note again that we do not write any casualty business. We are short duration company. Our average duration of our reserves is 2 years. Speaker 300:30:07As a result, we have always had a process of looking at our reserves on a timely basis quarter to quarter. And so each quarter you will see that we do release reserves or strengthen reserves based on loss activity for that particular quarter. We do not wait for a particular quarter or year end reserve review. In Q1, 2024, the activity in prior years was fairly benign across all three segments. And again, the results that would flow through are purely based on experience. Speaker 300:30:40There was no change in assumptions. It was purely based on the actual flow through of results for the quarter. Speaker 700:30:49Got it. Thank you. Operator00:30:53Your next question comes from Meyer Shields with KBW. Your line is now open. Speaker 800:31:00Great. Thanks so much. Dan, one first question. I just want to make sure I understand it. It sounds like the syndicate is going to be writing reinsurance as well. Speaker 800:31:09Should we assume that Fidelis is willing to take on more exposure in reinsurance through the syndicate in addition to whatever pricing momentum it is? Speaker 500:31:21Yes. Thanks, Mike. It's a really good question. As you know, we have a variable quota share. So we'll lean into lines where we do have appetite. Speaker 500:31:30And where we have less appetite, we'll take smaller shares. I think we have seen some very positive movement in terms of pricing on the reinsurance portfolio. And as I said in the script, we've taken premium increases rather than exposure increases. So we're monitoring there are some deals that flow into Lloyd's and Lloyd's only that we'd like to have access to. That's the whole one of the whole purposes of the syndicate is getting access to business we can't originate now. Speaker 500:31:58But we'll stay away from attritional. That's not really in our appetite. But depending on the risk, I think this is the key thing around the rotor is that we get to see every deal. If it looks attractive, we combined it. But if it's not with an appetite, we just won't match our capital to those risks. Speaker 800:32:17Okay. That's helpful. And then maybe on the flip side, Speaker 200:32:20What you talked about? Speaker 500:32:21I think I just clear out there that sorry, sorry, Mai, sorry to interrupt you. What I would say, that is going to have no whatever we do would have no impact on our kind of premium for 2024. It's a very small premium item for 2024. Speaker 800:32:38No, that's helpful. That clarifies things. With regard to the Direct and Facultative book, I was hoping for an update on reinsurance purchasing Speaker 500:32:56Yes. Another good question and actually very timely. So as you know, we buy a very broad range or suite of of products, both proportional, non proportional index. And 1.1 is a very busy time, as is 1.4. We tend to buy the D and F program there. Speaker 500:33:14It's coming within expectation. We've actually bought a bit more limit. You'll know we've just renewed the Herbie Rebonds 2 tranches of $150,000,000 or in total $150,000,000 and that gives us protection for U. S. Named storm and U. Speaker 500:33:29S. Quake. So as you know, as the portfolio is growing, then we'll look to take opportunity in the reinsurance market just to help us scale our line. Once again, being a leader in a verticalized market, especially like D and F, gives you a very, very differential result and we'll take advantage of that market if we can. Speaker 800:33:51Great. Fantastic. Thank you very much. Operator00:34:00Your next question comes from Mike Ward with Citigroup. Your line is now open. Speaker 900:34:07Thanks. Good morning. I was wondering if just technical, if the Lloyd's structure seating commission is comparable to the rest of the MGU sourced business? Speaker 300:34:21Hi, yes, it's Alan. Thanks, Mike. I think overall the Lloyd's expense structure is similar to how we have currently and I wouldn't expect any material change until our expenses overall as a result of the Lloyd's participation. Speaker 900:34:38Okay, thanks. And then, there is potential this hurricane forecast coming out. Just wondering if you guys could remind us your exposure if we do see some of the relatively extreme forecasts. Speaker 500:34:56Yes. I mean, we don't give out details on PMLs. As you know, we would say, we are exposed at 1 in 250 to Crake and then Southeast Clash. But we do, as I just mentioned, buy we have a lot of proportional protection on that portfolio in both the treaty and the D and S. And we buy a very broad suite of products. Speaker 500:35:22So we have non proportional, we have index products, just renewed the bonds, as I said a moment ago. So we think we're very well protected in that portfolio. Speaker 200:35:34Okay. Thank you, guys. Operator00:35:39Thank you. This concludes today's question and answer session. I'd like to turn the call back to Dan Burrows for closing remarks. Speaker 500:35:50Thank you everyone for joining us today. We appreciate your interest in our company. And if you do have any follow-up questions, Speaker 200:35:56we'll be around to take your call. So thanks Speaker 500:35:58very much and have a great day. Operator00:36:02Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallFidelis Insurance Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Fidelis Insurance Earnings HeadlinesFidelis Insurance Group Schedules First Quarter 2025 Financial Results Conference CallApril 17 at 9:40 AM | gurufocus.comFidelis Insurance Group Schedules First Quarter 2025 Financial Results Conference CallApril 17 at 8:15 AM | businesswire.com[Action Required] Claim Your FREE IRS Loophole GuideThis shouldn't surprise anyone who's been paying attention, but... Pres. Trump may be about to unleash the biggest "dollar reset" since 1971.April 19, 2025 | Colonial Metals (Ad)Barclays Cuts Fidelis Insurance (NYSE:FIHL) Price Target to $16.00April 14, 2025 | americanbankingnews.comFidelis Insurance Holdings Limited (NYSE:FIHL) Receives $20.29 Consensus Target Price from AnalystsApril 12, 2025 | americanbankingnews.comFidelis Insurance price target lowered to $16 from $18 at BarclaysApril 12, 2025 | markets.businessinsider.comSee More Fidelis Insurance Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Fidelis Insurance? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Fidelis Insurance and other key companies, straight to your email. Email Address About Fidelis InsuranceFidelis Insurance (NYSE:FIHL), a specialty insurer, provides insurance and reinsurance solutions in Bermuda, the Republic of Ireland, and the United Kingdom. It operates in three segments: Specialty, Reinsurance, and Bespoke segments. The Specialty segment offers aviation and aerospace, energy, marine, property direct and facultative, and other specialty risk solutions. The Reinsurance segment provides property, retrocession, and whole account reinsurance solutions. The Bespoke segment offers customized risk solutions for clients that include credit and political risk, as well as other risk transfer opportunities, including political violence and terrorism, limited cyber reinsurance, tax liabilities, title, transactional liabilities, and other bespoke solutions. Fidelis Insurance Holdings Limited was incorporated in 2014 and is headquartered in Pembroke, Bermuda.View Fidelis Insurance ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 10 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the Fidelis Insurance Holdings First Quarter 2024 Earnings Conference Call. As a reminder, this call is being recorded for replay purposes. Following the conclusion of formal remarks, the management team 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. Operator00:00:27Hunter, please go ahead. Speaker 100:00:29Good morning, and welcome to the Fidelis Insurance Group's Q1 of 2024's earnings conference call. With me today are Dan Burrows, our CEO and Alan DeClair, our CFO. 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. These risks and uncertainties are described in our 2023 Annual Report on Form 20 F filed with the SEC on March 15. Speaker 100:01:05Although we believe that the expectations reflected in forward looking statements have a reasonable basis when made, we can give no assurance that these expectations will prove to 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 also review periodic reports that are filed by us with the SEC from time to time. Management will also make reference to certain non GAAP measures of financial performance. Reconciliations to US GAAP for each non GAAP financial measure and our definition of RPI, which is our Renewal Pricing Index, can be found in our current report on Form 6 ks furnished to the SEC yesterday, which contains our earnings press release and is available on our website at idelisinsurance.com. Speaker 100:01:55And with that, I'll turn the call over to Dan. Speaker 200:01:58Thank you, Miranda. Good morning, everyone, and welcome to Fidelis Insurance Group's Q1 earnings call. I'm very pleased to report that we delivered a strong start to the year as we successfully capitalized on the continued mature odd market conditions, leaning into our core lines, achieving sustained profitable growth, leveraging our lead position to generate house results and broadening the footprint of our business. In the Q1, we increased gross premiums written by 21.6% and delivered a combined ratio of 85.8%, both of which were in line with our expectations. These excellent results reflect our strong underwriting and risk selection capabilities across our growing and well diversified book of business. Speaker 200:02:44We continue to see positive pricing across our portfolio with an RPI for the Q1 of 112 percent, demonstrating our ability to achieve preferential terms in a verticalized market. We delivered another strong quarter of return with an annualized operating ROAE of 14%, again in line with our expectations. We also grew book value per diluted common share to $21.22 For the full year, we remain on track to generate ROAE in the 14% to 16% range as we earn a greater portion of our capacity exposed premium in the second half of the year. As our results demonstrate, our strategy and structure are working exactly as intended. We have the flexibility, discipline and market access to deploy capital where we believe there are attractive risk reward opportunities in what continues to be the best market we have seen in decades. Speaker 200:03:43We are leveraging our scale, lead positioning and deep relationships with brokers and clients to grow our business and have constructed a diversified portfolio of short held specialty risks, which we believe is well positioned to deliver combined ratios in the mid to high ACs throughout the cycle. And as a reminder, we do not write casualty lines. The strength of our strategy is the daily underwriting calls, which were attended by all underwriters at both the Fidelis Insurance Group and the Fidelis Partnership. These calls provide insight across our entire portfolio, giving a forum to discuss our offering on each individual risk. They enhanced our ability to cross sell across target lines and help us quickly respond to market dynamics and capitalize on areas of opportunity. Speaker 200:04:33We continue to see opportunities across our core lines, with Property Direct and Facultracy being a great example where we delivered growth of 36.5% compared to prior periods. And we are capitalizing on attractive pricing within our broader specialty portfolio. In the Q1, we announced our participation and investment in the new Lloyd's Syndicate 3,123 with the Fidelis partnership, executing our capital and underwriting strategy and broadening the footprint of our business. For the targeted launch date of July 1, this vehicle is expected to add to our long term growth by providing access to enhanced ratings platform, global licensing and Lloyd's only business. The syndicate all right business across multiple insurance and reinsurance classes and will be an extension of our strategy to leverage our expertise to take these positions. Speaker 200:05:27Today's insurance group will be taking a variable credit share across the portfolio, which enables us to access additional business channels that align to our current risk appetite. This is a perfect example of why our underwriting relationship with the Fidelis partnership works so well. Our long term agreement was designed to enable us to match the right risk with the right capital. Exercising our right of first refusal with this variable purchase there allows us to do just that, participating in the lines where we have more risk appetite. As we consider industry events in the quarter, we wanted to touch on the March 26 Baltimore bridge collapse, which will impact the specialty insurance market. Speaker 200:06:09Given the complexity surrounding the event, it could take years to fully resolve. We continue to monitor developments and believe any loss resulting from the bridge collapse will be manageable within our diversified portfolio. So in summary, I'm very pleased with our Q1 performance, which positions us for another year of strong profitability growth from Midtown. With that, I'll pass it over to Alan to walk through our financial results in more detail. Speaker 300:06:36Thanks, Dan. And I'd also like to welcome everyone joining our Q1 earnings call. As Dan mentioned, we had an excellent first quarter to operating net income of $87,300,000 or $0.74 per diluted common share and an annualized operating return on average equity of 14%. Our book value per diluted common share at March 31 was $21.22 Looking at our gross premiums written, we had excellent top line growth of 21.6 percent in the quarter to $1,500,000,000 compared to the Q1 of 2023. This was driven in large part by the Specialty segment, which grew by $199,900,000 or 24 percent to $1,000,000,000 dollars This is consistent with our expectations for growth to be broadly in line with what we saw last year. Speaker 300:07:24Specialty growth was primarily driven by property B and F, which saw an increase of $62,400,000 or 36.5 percent from the prior year period, benefiting from the continued strong rating environment and new business. The growth is in line with the overall 38.7% growth we saw in its class across 2023. Other drivers of growth within our specialty book in the quarter included other property, which saw an increase of $55,700,000 and marine, which saw an increase of 49,900,000 dollars As a reminder, there is seasonality within our specialty book with Marine and Aviation and Aerospace being more heavily weighted to the first half of the year, while in property D and F, which we expect to be the key driver of specialty growth this year, we anticipate a more even distribution of premium across the quarters. Bespoke premiums were consistent with prior period, with 1st quarter gross premiums written of $153,500,000 an increase of 1.8 percent versus prior year. Our Reinsurance segment grew by $66,400,000 or 25.5 percent, driven by property reinsurance. Speaker 300:08:32As Dan discussed in our year end call, we write approximately a third of our reinsurance book at oneone, and in 2024 we saw strong oneone renewals achieving RPIs of 118%. Looking ahead, premiums from the New Lloyd Syndicate 3,123 variable quota share and our 9.9% investment in the syndicate will flow through each of our 3 segments. Our participation in the syndicate won't materially impact our expectations for growth this year. On a net premiums earned basis, we delivered an increase of 26.4 percent from the prior year to $488,000,000 in the Q1 of 2024, consistent with our growth in gross premiums written. As noted by Dan, our premiums are not earned on a straight line basis, with property catastrophe premiums more heavily weighted to the back half of the year. Speaker 300:09:26Our excellent underwriting performance resulted in a combined ratio of 85.8 percent for the Q1, which included a loss ratio of 37.4%. This 37.4% is composed of attritional losses, catastrophe and large losses, and prior year development. Looking at attritional losses, in the Q1, we had $146,300,000 or 30 percent compared to $139,500,000 or 36 percent in the prior year period. Capacity and large losses for the Q1 were $103,000,000 which includes a $51,200,000 provision for the Baltimore Bridge collapse. In addition to other IBNR and smaller events in various lines of business, including Aviation and Aerospace, Marine and Property D and F. Speaker 300:10:14Specific to the Baltimore Bridge class, our exposure is in line with our market position. We anticipate that any settlement will take a few years to play out and as such, we have set our provision based on a probabilistic model. We had net favorable prior year development of $67,000,000 for the quarter versus $2,100,000 in the prior year period. Of the $67,000,000 for the quarter, specialty was $34,400,000 dollars reinsurance was $24,300,000 and bespoke was $8,300,000 and this was all primarily driven by better than expected loss activity. Turning to expenses. Speaker 300:10:53Policy acquisition expenses from 3rd parties were 27.9 points to the combined ratio for the quarter, consistent with the prior year period. The Fidelis partnership commissions were 15.7 points to the combined ratio for the quarter, of which 1.8 points related to accrued profit commissions due to the strong underwriting results in the quarter. And finally, our general and administrative expenses were 4.8 points to the combined ratio for the quarter compared to 4.3 points of the combined ratio in the prior year period. Looking now at investments. Net investment income increased to $41,000,000 for the Q1 of 2024 compared with $20,400,000 in the prior year period. Speaker 300:11:36During the Q1 of 2024, we sold $201,200,000 of securities with an average book yield of 0.9 percent, resulting in a realized loss of $7,400,000 We reinvested the proceeds in securities with an average purchase yield of approximately 4.9%. At March 31, 2024, the average rating of fixed income securities remains very high at AA- with a book yield of 4.2%. Duration has lengthened slightly to 2.2 years. Turning to capital management, we remain committed to maintaining a strong balance sheet. As I mentioned last quarter, our capital management strategy includes: 1st, allocating capital to support and grow our business in attractive segments of the market 2nd, using Outward's reinsurance as a flexible and aligned source of capital and finally, returning excess capital shareholders through a combination of share buybacks and dividends. Speaker 300:12:38Specifically, during the Q1, as we mentioned, we grew our premiums and targeted lines seeing overall premium growth across our book of 21.6%. Regarding outwards reinsurance, we sponsored 2 new tranches of our Herbie REIT catastrophe bond for $150,000,000 of protection to cover earthquake and main storm events in the U. S, enhancing our overall outwards program. And we returned $16,800,000 to shareholders through $11,800,000 of common dividends and repurchases of $5,000,000 Subsequent to March 31, we have repurchased another $8,300,000 of shares. As of today, we have $36,700,000 remaining in our share repurchase authorization. Speaker 300:13:25In summary, I am very pleased with our excellent financial performance in the Q1 of 2024. Looking ahead, we are confident about the future as we continue to focus on delivering profitable underwriting and book value growth. I will now turn it back to Dan for additional remarks. Thanks, Alan. Speaker 200:13:44As you can see, we entered 2024 in an incredibly strong position. We are operating in a sustained hard market with attractive levels of pricing across our portfolio, and our strategy remains to actively capitalize on the significant opportunities this presents. Taking a closer look at our segments. In Specialty, which is our largest, conditions and pricing remain attractive across our core lines. And in the Q1, we achieved Specialty RPIs of 111%. Speaker 200:14:15As a reminder, our key drivers of specialty are property, direct and facultative, marine and aviation and aerospace. And our aim is to be a top 3 market for these classes. Our appetite for property direct and facultative has increased since late 2019 in response to attractive pricing levels, driven by the frequency of natural catastrophe and climate driven events and the exit of a number of larger carriers. Following a $120,000,000,000 of natural catastrophe losses in 2023 and an active start to 2024, including several U. S. Speaker 200:14:53Severe weather events, the market has remained dislocated with increased demand and no new meaningful supply of capital coming in. We continue to see attractive opportunities to deploy capacity across this key line of business, in line with our targeted risk selection approach, and we are pleased with the continued strong performance of this line during the quarter. Marine also remains a significant market for us, where we're able to leverage our leadership position to cross sell and set pricing, terms and conditions across multiple lines. We are seeing particularly attractive opportunities in large marine construction where significant capacity is acquired. We've had several new business wins this year. Speaker 200:15:38We pride ourselves in our ability to innovate, enabling us to offer meaningful solutions to our clients. We are an established leader in the classes we participate in, always looking to create powerful performance. Looking ahead, the specialty market continues to offer growth across our four lines at attractive returns, and we expect Specialty to continue to contribute to our growth throughout 2024. In Bespoke, our established relationships with clients and brokers along with our underwriting expertise enabled us to maintain our position as an industry leader, particularly when considering the high barriers to entry for others given the nature of the underlying risks. The unique nature of this business results in a less commoditized, more tailor made product that delivers low volatility underwriting performance with less exposure to typical market cycles. Speaker 200:16:33Given the highly tailored nature of this portfolio, premiums do not follow a regular predictable schedule. The Q1 was a solid start for the portfolio with premium in line with expectations. Looking ahead, our pipeline of structured risk transfer and political risk deals for the Q2 is in line with the prior year period, and we expect opportunities to continue for the rest of 2024. Finally, in Reinsurance, we continue to execute our strategy of deploying capacity at targeted attachment points with 4 clients, and this was an excellent quarter for this segment. Rate remains attractive following an enhanced pricing environment and adjustment of terms and conditions over the past few years. Speaker 200:17:17And we were able to achieve higher rate increases across our portfolio given our thoughts and price leadership. RTI for the quarter was 118% and was the main driver for premium growth year on year. Continue to see clients looking to buy more limit in the U. S. And Europe, where our ability to offer private layers helps us secure our platform programs. Speaker 200:17:40And whilst we are beginning to see an uptick in demand, there's been no major influx of new capacity. We continue to manage our portfolio in line with our view Speaker 300:17:49of risk and are happy Speaker 200:17:50with our position heading into the rest of the year. And briefly on fourone, we saw positive rate movement continuing in April, where our portfolio is driven by Japanese future renewals. We continue to enhance our broad and established relationships in the region to create opportunities and are pleased with the growth in our portfolio. As we look ahead to the rest of the year, we are focused on deploying capital, the best underwriting opportunities, and will further enhance our efforts to deliver consistently compelling returns through the cycle and create value for our shareholders. One example is the new Lloyd's syndicate, which opens the door to exploring additional opportunities within Lloyd. Speaker 200:18:33And longer term, we believe this will lead to broader opportunities globally as we continue our focus on aligning our capital to the right risk. In closing, 2024 is off to an excellent start. We are pleased with the momentum we had coming out for the Q1 and are ready to capitalize on opportunities across our portfolio. We are confident in the outlook for our business and remain on track to deliver operating ROAE in the 14% to 16% range for the full year, which is above our long term target. We continue to see growth potential in the current market and our scale, repositioning, balance sheet strength and expert execution from our dedicated teams positions us well to deliver sustainable, long term profitable growth and create meaning value for our shareholders. Speaker 200:19:21With that, I'll turn it back to the operator. Operator00:19:26Thank you. We will now begin the question and answer session. Please rejoin the queue. With that, our first question comes from the line of Matt Carletti with Citizen JMP. Your line is now open. Speaker 200:20:14Thank you. Good morning. I was hoping to start with Speaker 300:20:20very well, yourself? Speaker 200:20:23Yes, good. Thanks. Speaker 400:20:24Great. I wanted to start, I guess a 2 part question on the Baltimore bridge loss. I guess, one, if you could give us a little more perspective on kind of how you set that loss reserve, specifically if you can what your view of industry losses or if you've been able to kind of translate those terms? And then secondly, just what impact do you think that loss might have on the related particularly marine but related markets? Speaker 500:20:52Thanks for the question, Matt. I think firstly, we look at Baltimore and say it's within expectation given our market profile. As you know, we take a standard reserving approach. We would weight limits against the full range of probabilistic outcomes. We've written over $1,000,000,000 of specialty in the quarter. Speaker 500:21:12So we think, therefore, the loss to any loss is very manageable within that sort of diversified portfolio. But it's very complex and it's very early. So I think to talk about to the second part of your question, how we think about it will impact the market, we'll just wait for it to develop and see what the impact to the market will be in the future. I just think it's too early to think about exactly how pricing will be affected. Speaker 400:21:36Okay, fair enough. And then maybe just a modeling follow-up question. Policy acquisition costs by segment had some variation and you referenced mix of business and some reinsurance ceding commissions. Is there any is it just kind of quarterly to quarterly fluctuation there? Or is there anything kind of more forward looking we should think about? Speaker 400:22:00I guess asked in other ways or any reason to think kind of where we sat by segment on like a full year 'twenty three level, it would look materially different for full year 'twenty four? Speaker 300:22:13Hi, Matt. Thanks for the question. It's Alan. No, I think you have the right answers. One important factor to always consider in our book of business is that we do buy a significant amount of outwards reinsurance and that can also significantly impact the post acquisition costs on a quarter to quarter basis. Speaker 300:22:33If it's quarter share business that we buy on an outwards basis, there can there is a ceding commission and a profit commission that comes back to us. So it can fluctuate quarter to quarter depending on mix of business that is written and earned in the quarter. But I think overall the rate the run rate in the Q1 and in 2023 is the way to think about it. Speaker 200:22:55Okay, great. Thank you. Appreciate it. Operator00:23:00Your next question comes from Mike Zaremski with BMO. Your line is now Speaker 600:23:07open. Hey, hi. Great. Good morning. Just following up because I think some of us are trying to track all the what each company is thinking on the Baltimore bridge losses. Speaker 600:23:22So are you so some companies have said like the range is $1,000,000,000 to $3,000,000,000 they're reserving at the upper end. Just curious if you wanted to provide any kind of color on that. If not, I can just move on to the next question. Speaker 500:23:36Yes. I think when, as I said, we weigh against all of the probabilistic outcomes. And I think if you think at the top end of our range, it will be bang in line with the commentary you've heard from some of our peers. Speaker 600:23:50Okay. Got it. Okay. So just switching gears to a lot of talk in recent months about property pricing, power decelerating, but still increasing and coming off of record levels in many cases. I'm looking at some of your RPI KPIs that are helpful. Speaker 600:24:13Is that directionally, it looks like that's what you guys are also seeing. I don't think bespoke RPIs broken out as often. But what's your thought process and kind of pricing power in the overall marketplace? Speaker 500:24:29Yes. Thanks, Mike. It's a really good question. Firstly, on Bespoke, because of the nature of that product line, it tends to be more insulated against market cycles. So we do see some improvement in terms on some of those lines. Speaker 500:24:43But generally, it's kind of flatter as opposed to the reinsurance and the specialty. But when we think about market duration, it's still the best or pricing in the market, still the best market we've seen for 20 to 25 years. We've had compound increases over the last 3 or 4, 5 years. It's still a very verticalized market. We talked about this before. Speaker 500:25:04So not everyone starts in the same place. So as a leader on across the portfolio, about 90% of the business, then we're able to dictate terms, conditions and we get better pricing, better coverage. And obviously, we see the opportunities early as well. So we're able to have, we think, a better risk selection on that basis. But we're still seeing positive movement. Speaker 500:25:25There's a lot of demand in the market. And despite those secular factors that we talked about long and hard, climate change, catastrophe reserves, inflation, there's really been no new influx of significant capacity into the market. But inflation is driving demand, and we've seen that. So having that lead line that's scalable, it gives us leverage, we're important and relevant to brokers and clients, and that's how we get the differential terms. That's what creates the alpha. Speaker 600:25:58That's helpful. And just lastly, just on the share authorization. Stocks outperformed meaningfully since you announced that. Just anything we should think about in terms of how you all kind of are going to pace it going forward based on valuation? Speaker 300:26:21Hi, it's Alan. Thanks for the question. No, I think when we announced the program in the latter part of December 2023, there was a $50,000,000 buyback program. We said we'd be measured, but certainly at the values of our shares, it was certainly accretive to shareholders. I think given our current $21.22 book value, we could still continue executing on the program throughout 2024. Speaker 300:26:48There's a 12 month authorization. So I think the pacing was right. And I think we will be in the market depending on share price and whether it's accretive to book value. Speaker 600:27:01Thank you. Operator00:27:05Your next question comes from Yaron Kinar with Jefferies. Your line is now open. Speaker 700:27:11Thank you. Good morning. I want to start with the bespoke segment, if we could. You offered some very helpful guidance last quarter talking about a pipeline that was relatively flat year over year. I think where there is still a Speaker 200:27:26bit of Speaker 700:27:27fluctuation is on the session rate there. And I'm guessing it's because the book is essentially all new as opposed to renewed every quarter and therefore, you can see pretty significant fluctuations. But is there any, I guess, guidance or rule of thumb you can offer us in terms of thinking of what a proper seeding rate should be there, A. And B, maybe you can talk about maybe the differences in the composition of the portfolio year over year that would have resulted in the change in session rate? Speaker 500:28:02Thanks, Sean. It's a great question. So it's Dan. I'll start. I think specifically, this is about business mix and the difference in session rate this time was around a cyber relationship that we have, and we buy a lot of proportional reinsurance on it. Speaker 500:28:19And Alan said earlier, we see that as a very fungible form of capital that helps scale our line and really gives us leverage as a leader. But in that particular instance, it's because we're seeking out premium because of the scale of the proportional program that we buy on it. Speaker 700:28:36Okay. And is there a way for us to think about like is a 50% session rate a reasonable number to think about going forward? Obviously, there's going to be some fluctuation quarter to quarter, but just want to make sure we're thinking about it correctly. Speaker 300:28:52Thanks, Yaron. It's Alan. Yes, as you mentioned at the start of your question, the bespoke segment by its nature has some fluctuations on the business we write and they tend to be unique. They're not necessarily all renewals. But in general, I would go with the we would go with the sort of 2023 overall yearly session rates, which we think of as more in the 40%, maybe as high as 50%, again, depending on type of deal. Speaker 300:29:18But it'd be more around the range of 40% session. Speaker 700:29:22Got it. Thanks. And my second question, I realize it's maybe my 3rd, but I'll try it anyway. The timing of reserve reviews, this is a very significant release this quarter. I think the largest disclosed quarterly release that I remember. Speaker 700:29:41Can you maybe talk about what drove that specifically and maybe how you look at the reserves over the course of the year as well? What books are reviewed? Speaker 300:29:53It's Alan again. I'll take that question. For context, I would note again that we do not write any casualty business. We are short duration company. Our average duration of our reserves is 2 years. Speaker 300:30:07As a result, we have always had a process of looking at our reserves on a timely basis quarter to quarter. And so each quarter you will see that we do release reserves or strengthen reserves based on loss activity for that particular quarter. We do not wait for a particular quarter or year end reserve review. In Q1, 2024, the activity in prior years was fairly benign across all three segments. And again, the results that would flow through are purely based on experience. Speaker 300:30:40There was no change in assumptions. It was purely based on the actual flow through of results for the quarter. Speaker 700:30:49Got it. Thank you. Operator00:30:53Your next question comes from Meyer Shields with KBW. Your line is now open. Speaker 800:31:00Great. Thanks so much. Dan, one first question. I just want to make sure I understand it. It sounds like the syndicate is going to be writing reinsurance as well. Speaker 800:31:09Should we assume that Fidelis is willing to take on more exposure in reinsurance through the syndicate in addition to whatever pricing momentum it is? Speaker 500:31:21Yes. Thanks, Mike. It's a really good question. As you know, we have a variable quota share. So we'll lean into lines where we do have appetite. Speaker 500:31:30And where we have less appetite, we'll take smaller shares. I think we have seen some very positive movement in terms of pricing on the reinsurance portfolio. And as I said in the script, we've taken premium increases rather than exposure increases. So we're monitoring there are some deals that flow into Lloyd's and Lloyd's only that we'd like to have access to. That's the whole one of the whole purposes of the syndicate is getting access to business we can't originate now. Speaker 500:31:58But we'll stay away from attritional. That's not really in our appetite. But depending on the risk, I think this is the key thing around the rotor is that we get to see every deal. If it looks attractive, we combined it. But if it's not with an appetite, we just won't match our capital to those risks. Speaker 800:32:17Okay. That's helpful. And then maybe on the flip side, Speaker 200:32:20What you talked about? Speaker 500:32:21I think I just clear out there that sorry, sorry, Mai, sorry to interrupt you. What I would say, that is going to have no whatever we do would have no impact on our kind of premium for 2024. It's a very small premium item for 2024. Speaker 800:32:38No, that's helpful. That clarifies things. With regard to the Direct and Facultative book, I was hoping for an update on reinsurance purchasing Speaker 500:32:56Yes. Another good question and actually very timely. So as you know, we buy a very broad range or suite of of products, both proportional, non proportional index. And 1.1 is a very busy time, as is 1.4. We tend to buy the D and F program there. Speaker 500:33:14It's coming within expectation. We've actually bought a bit more limit. You'll know we've just renewed the Herbie Rebonds 2 tranches of $150,000,000 or in total $150,000,000 and that gives us protection for U. S. Named storm and U. Speaker 500:33:29S. Quake. So as you know, as the portfolio is growing, then we'll look to take opportunity in the reinsurance market just to help us scale our line. Once again, being a leader in a verticalized market, especially like D and F, gives you a very, very differential result and we'll take advantage of that market if we can. Speaker 800:33:51Great. Fantastic. Thank you very much. Operator00:34:00Your next question comes from Mike Ward with Citigroup. Your line is now open. Speaker 900:34:07Thanks. Good morning. I was wondering if just technical, if the Lloyd's structure seating commission is comparable to the rest of the MGU sourced business? Speaker 300:34:21Hi, yes, it's Alan. Thanks, Mike. I think overall the Lloyd's expense structure is similar to how we have currently and I wouldn't expect any material change until our expenses overall as a result of the Lloyd's participation. Speaker 900:34:38Okay, thanks. And then, there is potential this hurricane forecast coming out. Just wondering if you guys could remind us your exposure if we do see some of the relatively extreme forecasts. Speaker 500:34:56Yes. I mean, we don't give out details on PMLs. As you know, we would say, we are exposed at 1 in 250 to Crake and then Southeast Clash. But we do, as I just mentioned, buy we have a lot of proportional protection on that portfolio in both the treaty and the D and S. And we buy a very broad suite of products. Speaker 500:35:22So we have non proportional, we have index products, just renewed the bonds, as I said a moment ago. So we think we're very well protected in that portfolio. Speaker 200:35:34Okay. Thank you, guys. Operator00:35:39Thank you. This concludes today's question and answer session. I'd like to turn the call back to Dan Burrows for closing remarks. Speaker 500:35:50Thank you everyone for joining us today. We appreciate your interest in our company. And if you do have any follow-up questions, Speaker 200:35:56we'll be around to take your call. So thanks Speaker 500:35:58very much and have a great day. Operator00:36:02Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by