Fidelis Insurance Q2 2025 Earnings Report

Fidelis Insurance EPS Results

• Actual EPS: $0.12
• Consensus EPS: -$0.12
• Beat/Miss: Beat by +$0.24
• One Year Ago EPS: N/A

Fidelis Insurance Revenue Results

• Actual Revenue: $1.22 billion
• Expected Revenue: $604.62 million
• Beat/Miss: Beat by +$614.38 million
• YoY Revenue Growth: N/A

Fidelis Insurance Announcement Details

• Quarter: Q2 2025
• Date: 8/13/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 14, 2025
• Conference Call Time: 9:00AM ET

Fidelis 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.

Fidelis Insurance Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In the first half of 2025, Fidelis grew gross written premiums by 9% to $2.9 billion, driven by 7% growth in the Insurance segment and high retention on new business.
• Positive Sentiment: Excluding the impact of the Russia-Ukraine litigation, the quarterly combined ratio would have been in the mid-seventies, with ROAE significantly above through-the-cycle targets.
• Positive Sentiment: The board expanded capital returns by renewing a $200 million share buyback authorization and raising the quarterly dividend to $0.15 per share, supported by a robust capital position.
• Negative Sentiment: Aviation remains the most challenged line, with Fidelis choosing not to renew accounts that fail underwriting hurdles and awaiting sustained market rate improvements.
• Positive Sentiment: Specialty lines such as asset-backed finance, portfolio credit, and political risk continue to be core growth drivers, featuring a healthy pipeline and insulation from standard insurance cycles.

Presentation

[Miranda Hunter, Head - IR at Fidelis Insurance Holdings]

Good morning, and welcome to Fidelis Insurance Group's second quarter twenty twenty five earnings conference call. With me today are Dan Burrows, our CEO Alan Declare, 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 second quarter earnings press release, our most recent annual report on 20 F and other reports filed with the SEC, which are available on our website at fidelisinsurance.com.

[Miranda Hunter, Head - IR at Fidelis Insurance Holdings]

Although 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 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 second quarter earnings press release available on our website, fidelisinsurance.com, as well as our other 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. For reconciliation to US GAAP for each non GAAP financial measure can be found in our current report on Form six k furnished to the SEC yesterday, which contains our earnings press release and is available on our website at the dallasinsurance.com. With that, I'll turn the call over to Dan.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Thanks, Miranda. Good morning, everyone, and thank you for joining us on our call today. I'd like to take a minute before discussing our quarterly results to reflect on the past two years since our IPO. I'm incredibly proud of our firm's achievements during this time. We have established ourselves as a market leader with a high quality, scaled, and diversified portfolio focused on short tail specialty risks.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Our strategy, structure, and lead positioning have provided us with the flexibility, discipline, and market access to deploy capital where we believe there are attractive risk reward opportunities. And we have demonstrated our ability to balance the pursuit of profitable underwriting with capital returns to shareholders. In fact, since 2022, we have delivered gross written premium growth of 54% and increased our book value per diluted share by 39%, including common share dividends. This year also marks the ten year anniversary of the launch of Fidelis. The Fidelis partnership remains our cornerstone partner, writing over 100 products across our 10 major lines of business.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Since our inception, we have maintained a collaborative and innovative approach to underwriting and leveraged our long standing relationships with brokers and clients to establish lead positioning and facilitate cross sell opportunities. The Predoenas partnership has set a high bar for any additional partnerships, but we are actively expanding our platform as we continue to evolve our business with a focus on deploying capital to the right risks. This year, we have successfully onboarded new strategic partners with proven track records in highly accretive lines of business, and we continue to see an exciting pipeline. Our structure continues to work exactly as intended, providing access to the best underwriters in the industry and ensuring an enhanced level of rigor around risk selection. Turning to the quarter, I want to highlight three key takeaways, all of which will be important context for today's discussion.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

First, any remaining exposure to the Russia Ukraine lesser policy litigation is insignificant, and we can now draw a line under this. Secondly, we continue to take advantage of profitable growth supported by very attractive margins across the portfolio as a whole. And finally, our capital position remains strong, which gives us the flexibility to enhance shareholder returns as demonstrated by the recent expansion of our capital management initiatives announced last week. With this in mind, through the first half of the year, we grew our gross written premiums to $2,900,000,000, resulting in year to date growth of 9% driven by high retention levels and new business opportunities across the portfolio, including business from third parties. The combined ratio for the quarter was 103.7%, reflecting the impacts of the English High Court judgment on the aviation and aerospace line of business in relation to Russia Ukraine lesser policy litigation, which was within the range of expected outcomes we disclosed last quarter.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Our annualized operating ROAE was 2.3% for the quarter with net income of $20,000,000 and operating net income of $14,000,000. Excluding the impacts of Russia Ukraine lesser policy litigation, we have outperformed our through the cycle targets, achieving a combined ratio in the mid seventies for the quarter and significantly surpassing our ROAE targets. Additionally, we would have significantly outperformed our year to date targets on both a combined ratio and ROAE basis. With the line drawn under this, we are focused on capitalizing on the opportunities ahead of us to drive accretive growth and returns. Taking a closer look at performance across both of our segments.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Our position as a market leader enables us to achieve favorable signings with preferential rates, terms and conditions upholding a clear differential to market. Within our Insurance segment, we delivered 7% premium growth in the quarter as we continue to deploy capacity into higher margin areas, supported by a strong flow of new business across the portfolio. Overall, our segment RPI was flat for the quarter as we maintained our disciplined approach and walked away from underpriced business. Our direct property book continued to deliver strong returns, benefiting from the compound rate increases we have achieved on a sustained basis. It's important to understand that property is a highly verticalized market.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

This allows us to achieve significant pricing differentials compared to subscription market players. As a market leader, we are positioned to write private layers, leverage our line size and flexibility to deploy across programs and offer clients capacity on a cross class basis. This has enabled us to achieve high retention levels and maintain our discipline on terms, conditions and rate movement to achieve leadership terms and pricing. Overall, RPIs are down slightly, but pricing adequacy of our portfolio remains at one of the highest levels we have seen in decades. Asset backed finance and portfolio credit remained a core growth driver as we executed on a number of pipeline structured credit deals and continue to recognize revenue from our third party relationships.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

These more bespoke insurance lines, the buying motivation is often driven by capital relief or underlying transaction facilitation are insulated from traditional insurance pricing cycles. And we continue to see a healthy pipeline with both new and repeat clients. We lead substantially all of this business, demonstrating the value we are able to bring clients on structuring value adding products. We see aviation as the most challenged part of our portfolio, and we will not write business that does not meet our underwriting hurdles. As such, we have not renewed certain accounts originally forecast for the year.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We continue to monitor developments in pricing and leverage our line across the subclasses. We are beginning to see signs of small pricing adjustments on select accounts in the all risk sector given heightened loss activity and remain well positioned to take opportunity where we see margin and adequacy. As a reminder, we are not willing to compromise on our underwriting discipline, and we will continue to deploy capital in more accretive ways until we see signs of sustained market improvement. Turning to reinsurance. On the back of strong growth over the past few years, our premium in the quarter was broadly in line with prior year as we continue to focus on optimizing the portfolio with core clients.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We are seeing some movement in rating in certain parts of the portfolio due to increases in capacity levels, but the fundamentals of this portfolio remain. And we continue to deploy capacity effectively in line with our view of risk. Looking at four one Japanese renewals, being nimble, we shifted capacity from the less compelling excess of loss deals towards proportional coverage, allowing us to benefit from the underlying rate improvements coming through. Rate adequacy largely held at sixone, which was dominated by US property, with a number of exceptions on programs where we maintained discipline and walked away. For the sixone renewal, our portfolio saw the largest growth in the nationwide, Northeast and Hawaii segments and a modest decline in Florida, which aligns with our strategy and risk appetite going into midyear.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We continue to see attractive opportunities to deploy capacity flexibly in line with our view of risk and continued year to date growth. Turning to Outreach Reinsurance. It serves as a core component of our portfolio management strategy. This approach allows us to leverage the market on both the inward and outward sides of our book to optimize margins. Our strategy is always focused on using reinsurance to reduce volatility, minimize potential net losses, enhance margins, and secure leading positions across lines.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We do this through both traditional reinsurance markets and capital markets instruments, and we constantly review our program to optimize protection and manage exposures. Dynamics within the Alvis market continue to provide attractive opportunities, and we were able to capitalize on these dynamics to sponsor the Herbie seven cat bonds, taking advantage of strong investor appetite to purchase $90,000,000 of limit on an aggregate multi peril and region basis. This replaces the expired Herbie three bond, which responded as intended to various cat events across the past twelve months. In the traditional market, we successfully renewed cat protections on the DNF book at four one, taking advantage of attractive pricing, attachments levels and capacity. As a reminder, we are an active buyer of a broad suite of products, including index.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

And across our whole outreach program, we achieved a significant improvement in RPIs year to date. Turning to capital management. As I mentioned last week, we announced a meaningful expansion of our capital management initiatives, renewing our common share repurchase authorization to $200,000,000 and raising our quarterly dividend to 15¢. As we have said before, we do not believe our current stock price properly reflects the value of our platform. This current dislocation provides an excellent opportunity to deliver value to our shareholders in a highly accretive way.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Our strong capital position gives us the flexibility to enhance returns while continuing to pursue attractive underwriting opportunities. And with that, I will pass over to Alan, who will provide more color on our second quarter financial results.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Thanks, Dan, and good morning, everyone. Taking a closer look at our quarterly results, our net income was $20,000,000 or $0.18 per diluted common share. We had operating net income of $14,000,000 or $0.12 per diluted common share. This resulted in an annualized operating return on average equity of 2.3%. We continued to grow our book value per diluted common share, which now stands at $22.4 In the second quarter, we grew our gross premiums written by 2% to $1,200,000,000 bringing our year to date gross premiums written to $2,900,000,000 an increase of 9% versus the same period last year.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

In the Insurance segment, gross premiums written increased by 7% in the quarter to $9.00 $2,000,000 This growth was driven by increases in our asset backed finance and portfolio credit and political risk, violence and terror lines of business. Meanwhile, in the Reinsurance segment, gross premiums written were $317,000,000 for the quarter compared to $346,000,000 in the prior year period. For the 2025, gross premiums written increased 7% in insurance and 15% in reinsurance as we continue to capitalize on attractive growth opportunities while maintaining a disciplined approach to underwriting opportunities that did not meet our thresholds. Our net premiums written increased by 4% versus the 2024, and our net premiums earned increased by 7% for the same period, driven by the growth in net premiums written in the current and prior year periods. Turning to the combined ratio of 103.7% for the quarter.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

I'll break down the components in more detail. During the second quarter, our attritional loss ratio continued to trend positively, improving to 24.7% and for the first half of the year, 23.7%. This compares to 25.9% in the 2024, reflecting the strength of our underlying portfolio. Our catastrophe and large loss ratio was 13.8% or $74,000,000 of losses, reflecting a lighter catastrophe and large loss quarter compared to the same period last year when our catastrophe and large loss ratio was 36.2% or $181,000,000 Catastrophe and large losses in the quarter included an Air India loss of $26,000,000 in our aviation and aerospace line of business. We recognized net adverse prior year development of $89,000,000 in the second quarter.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

This compares to net favorable prior year development of $69,000,000 in the same period last year. The Insurance segment experienced net adverse development of $113,000,000 in the quarter. As discussed, this primarily relates to the judgment handed down by the English high court regarding the Russia Ukraine aviation litigation. Excluding the judgment, we are pleased with the strong performance of the underlying insurance portfolio as we recognize favorable reserve development across the book, including better than expected loss emergence in our property line of business. We continue to have net favorable development in the Reinsurance segment, which was $24,000,000 in the quarter, driven by positive development and prior year catastrophe losses and benign prior year attritional experience.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Turning to expenses. Policy acquisition expenses from third parties were 31.4 points of the combined ratio for the second quarter compared with 28.4 points in the prior year period. While we may see movements quarter to quarter, policy acquisition expenses are in line with expectations, and we continue to anticipate our annual policy acquisition expense ratio to be in the low 30s and in the mid-20s in Insurance and Reinsurance segments, respectively, in line with our half year results of 30.6% in insurance and 23.4% in reinsurance. The Fidelis partnerships commissions accounted for 13.1 points of the combined ratio for the quarter compared to 15 points in the 2024. There was no profit commission accrued in the quarter as the underwriting profits did not meet the required hurdle.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Finally, our general and administrative expenses were $22,000,000 versus $24,000,000 in the 2024. The decrease in expense was driven by lower variable compensation accrued in the quarter. Moving on to our investment results. Our net investment income for the quarter was $45,000,000 compared to $46,000,000 in the prior year period. In addition to our net investment income, we had net unrealized gains on other investments of $5,000,000 as a result of our strategic deployment of assets into a diversified hedge fund portfolio at the 2024.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

This portfolio now represents approximately 5% of our total investable assets and is part of our ongoing strategy to generate superior risk adjusted diversified investment returns and enhance shareholder value. As of June 30, the average rating of our fixed income securities remains very high at A plus with a book yield of 5%, reflecting the steps we have already taken to optimize our portfolio. Average duration remains consistent with year end at two point eight years. Turning to tax. Our effective tax rate for the first half of the year was 18.9% compared to 14.6% in the 2024.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

This rate reflects a greater proportion of pretax income generated in higher tax rate jurisdictions. In the full year, we expect our effective tax rate to remain in the 19% range given the expected mix of profits and losses across the three countries. Looking at our capital management strategy. During the quarter, we executed a number of key actions, and we recently announced a significant expansion of our capital management initiatives. We continue to return capital to shareholders through a combination of dividends and share buybacks.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

In the second quarter, we repurchased 5,500,000.0 common shares for $88,700,000 at an average price of $16.17 per common share. This includes 3,100,000.0 common shares that were repurchased through a privately negotiated transaction with CBC, who remains one of our long standing shareholders having owned our shares since our founding. This brings our shares repurchased year to date to 6,900,000.0 common shares at an average price of $16.01 That's approximately 73% of our current diluted book value per share and thus 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 strategic approach to share repurchases has provided $79,000,000 to shareholders or $0.73 to our book value per share. Additionally, last week, we announced that our board approved a renewal of our repurchase authorization given the strength of our balance sheet, which brings our total current authorization to $200,000,000 The board also approved an increase to our quarterly common dividend to $0.15 per share, bringing our dividend yield to 3.6%.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Also on the capital management front, we successfully completed a $400,000,000 issuance of fixed rate thirty year subordinated notes during the quarter. The offering was met with robust demand from our broad base of high quality institutional investors, which we view as a clear vote of confidence in our balance sheet, our underwriting strategy and long term growth outlook. Our debt to total capital ratio stands at 26.6%, which reflects the raising of the subordinated notes and the redemption of our remaining preference securities. Our capital position provides increased flexibility as we look ahead, including as we approach the interest rate reset for our junior subordinated notes in April 2026. Another important part of our capital management strategy is outwards reinsurance, and we are constantly optimizing our purchasing program.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

As Dan noted, we sponsored a new cap bond under our Herbie reprogram during the quarter, which resulted in a slight increase in our ceded premium written. For the full year, we continue to estimate that a 40% session rate across our entire portfolio is the right way to think about it. Within the insurance segment, this rate would be closer to the mid thirties, while in the reinsurance segment, it'd be closer to the fifties. To give some further context around our key natural peril exposure, our one in 100 windstorm clash for Southeast, Gulf, and Caribbean and our one and two fifty California earthquake PML are both less than 10% of shareholders' equity, excluding AOCI. In conclusion, we remain confident in our business and the strength of our portfolio.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

We are well capitalized and committed to deploying capital to accretive opportunities that maximize shareholder value. I will now turn it back to Dan for additional remarks.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Thank you, Alan. Looking ahead, our focus remains on striking the optimal balance between underwriting growth and other strategic uses of capital. As I mentioned earlier, we believe share repurchases are a highly accretive use of capital right now given the considerable discounts to our net book value. The trading environment remains highly favorable on our nimble underwriting approach and leadership position across call lines means we are well positioned to optimize the portfolio and capitalize on attractive risk reward opportunities, where price adequacy remains strong after years of compound increases. Given the dynamics of the market and the other capital opportunities on our current share price, we now expect underwriting growth for the full year to be approximately 6% to 10%.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

In insurance, we take a holistic view of the market, targeting areas of growth to optimize margin and continue to execute a disciplined approach in areas of increasing competition. In asset backed finance and portfolio credit, we are seeing a strong pipeline of structured credit deals, a buildup of activity as we head towards the end of the year. In property, we continue to forecast high retention rates, margin, and profitability. Supported by years of compound rate increases, our market differential and the strength and diversity of our distribution network, we continue to take advantage of new business flowing into the E and S market with strong pricing credentials. In marine, the market is stable, and we continue to build a balanced portfolio by leveraging our capacity across subclasses and leaning into new marine construction opportunities.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

And in aviation, while we are beginning to see signs of some pricing adjustments in the oil risk sector with single digit rate increases, we are not willing to compromise on our underwriting discipline, and we'll continue to deploy capacity in more accretive ways until we see signs of sustained improvement. In reinsurance, with the majority of premiums now written for the year, we continue to optimize the portfolio with a focus on top tier clients. And as mentioned earlier, we remain focused on managing exposures in line with appetite through targeted deployments and the use of outwards reinsurance. At sevenone, we saw a number of loss impacted California wildfire opportunities with compelling price increases. Post loss pricing supports an overall positive RPI with better pricing in The U.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

S. And flatter pricing internationally. As we look ahead, our focus is now on the remainder of the year and The U. S. Wind season, which will determine the trajectory of the market into 2026.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

In summary, I'd like to leave you with a few key points. First, as we move past the uncertainty associated with Russia Ukraine litigation, we expect to unlock compelling growth opportunities moving forward. We have unwavering confidence in the business we have built, and we are actively managing our portfolio to take advantage of profitable opportunities in what remains an attractive trading environment for market leaders. This includes continuing to actively cultivate a pipeline of new third party partnerships, which will be accretive to our overall underwriting strategy. And finally, we are leveraging our agility and strong capital position to prioritize and expand a set of capital management initiatives to maximize shareholder value.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

As we move forward, we are excited to demonstrate the strength of our business and our ability to outperform through the cycle as we unlock new opportunities, capitalize on the current market dislocation and deliver superior returns to our shareholders. With that, operator, we will now open it for questions.

[Operator]

Thank you. We will now begin the question and answer session. You.

[Operator]

Just as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. Before we take our questions, I would like to kindly ask everyone to please limit your questions to one primary question along with a single follow-up. If you have any further questions, please rejoin the queue. The first question we have with that comes from Meyer Shields with KBW. Please go ahead.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. Thanks so much and good morning. Dan, you mentioned that this year's wind season could determine the trajectory of property gas pricing going forward. And I guess that is a concept, but I'm wondering maybe more specifically since California's wildfires didn't seem to have an impact on pricing outside of California. What sort of loss or losses in Florida or in the Southeastern United States from wind season do you think it would take to impact overall profit cap pricing for next year?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yeah. Thanks, Meyer. And I think that really has been a path that we've seen in recent loss activity. You know, years ago, a decent size loss would affect the whole market, and we we haven't seen that. We've just seen, you know, California wild prices with any real movement.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

I would say it's really about a capsule event. That's what's really gonna change the market, something that really hits capital and potentially rating. I think for us, you know, we've got a well managed portfolio. We're a big user of outreach reinsurance. We talked a little bit about some of our key PMLs, so we think we're well positioned. But I I think it's really a capital event.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Thanks. And switching gears a little bit, was hoping to talk about maybe demand for political risk, error, and coverages like that, and how that compares to recent years.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yeah. Thanks. I I think, you know, we have been trading in the political risk, and that kind of bespoke products for the best part of ten years now, have an incredibly good loss ratio in the low thirties. So it's been a very profitable business, but it's it's a very innovative, very high barriers to entry. I think what we've seen now, we're fully through COVID that there's been an uptick in underlying kind of deal activity.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

And remember, what we're looking at are protections that facilitate the underlying transactions for capital relief, for solvency margin, and we're just seeing a bigger pipeline. The key thing is to pick the managers of those underlying portfolios that manage geopolitical risk, that manage macroeconomic issues. And in that ten years, we've been through COVID. We've been through various issues that have affected the market, and it's been a very profitable line of business for us. So we have seen two things, new customers coming to us, which is exciting because I think that shows that we can add value to clients, but also repeat customers, which shows that they're very happy with the service that we're providing.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

But it's an exciting area for us, strong pipeline. As you know, a lot of those deals tend to see an uptick in activity q three, q four. So we're building that pipeline, but we're very pleased with what we're seeing so far.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. Thank you very much.

[Operator]

Thank you. Your next question comes from Leon Cooperman with Omega. Your line is open, Leon.

[Leon Cooperman, Chairman and CEO at Omega Family Office]

Congratulations on your results. But I need a little help in my analysis as I'm not an insurance expert. The company has done a seemingly excellent job in capital management and risk management, which has resulted in a company that's selling at a discount valuation relative to its peers. And checking around the street, it seems that our unusual structure is probably responsible plus the Ukraine issue and the California wildfires, which are behind us. They would your book value has been able to rise throughout that period of losses, which is impressive.

[Leon Cooperman, Chairman and CEO at Omega Family Office]

How do you explain your discount valuation? And is it due to the structure? Because I know Richard Brindle, and he's done an outstanding job. He's a good guy to have with your team. Why are we selling a discount valuation?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yes. Look, thanks, Lee. And we completely agree that our stocks undervalued at the time. And just to highlight the performance ex Russia Ukraine for the quarter, we would have been in the mid-70s. And even if we look at Q1 with Russia Ukraine sorry, with wildfires and that ex Russia Ukraine, we'd be ahead of plan.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

So the results are exceptional. And remember that business, Russia Ukraine, was written pre bifurcation. So that gives us a lot of confidence, not only in trading environment, but how the TFP are building the portfolio. It's mature, it's diversified, it's optimized, but it's highly profitable. So I think where we are now, we're in a really strong position to buy back stock because we do think we're undervalued.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

But when you look at performance, it really indicates that the structure is working exactly as intended. They're focusing on the inwards portfolio. They're creating alpha. We've got one of the best combined ratios, ex Russian Ukraine in the market. So we agree we're undervalued, but it allows us to take advantage of that dislocation, buy back shares, expand the share repurchase program, and that creates immediate value.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

So what we'll do is to continue to focus on performance. We think that will unlock the true value in the business. But you're absolutely right, Lee. It should be trading above book. We think we're undervalued.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

It does create an opportunity to buy back stock. But I think the structure works exactly as it should be working. We match the right capital to the right risk. They concentrate on the underwriting. And we're now we're post Russia Ukraine.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We can draw a line under it. Those those unencumbered results will come through and prove it to the market.

[Leon Cooperman, Chairman and CEO at Omega Family Office]

I think you said in your formal remarks that the business conditions are still reasonably strong, and I infer that the 50% return on equity would not be a reasonable expectation?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Sorry, I've got a weak line there. Could you repeat the question, please?

[Leon Cooperman, Chairman and CEO at Omega Family Office]

Yes, I would say that the 15% return on equity in this environment would be a reasonable expectation or we're superior to that?

[Operator]

15%

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

ROE in this part

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

of Yes. Thanks. Look, I think yes, look, I look at the performance ex Russia Ukraine. I'm going to keep emphasizing that point. That shows to us that we can be really confident in the underlying book, the market environment.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

And I think based on those two factors, current market dynamics, opportunities to grow, the maturity and optimization of portfolio, we're really well positioned to deliver on our through the cycle targets. Obviously, the second half of the year is determined by cat activity, so it's all to play for. But we manage that very well. We've talked about our PMLs. The performance today has been excellent.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

So yes, we're confident we can deliver on those through the market cycle targets.

[Leon Cooperman, Chairman and CEO at Omega Family Office]

Good luck. Thank you very much.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Thanks very much.

[Operator]

Your next question comes from David Motemaden with Evercore ISI. Please go ahead.

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Hey, thanks. Good morning. Dan, you had mentioned, I think you had said that property D and F RPI was down slightly this quarter. I'm wondering if you could just elaborate a little bit on where it went to, where it was last quarter? And maybe talk about if you saw that continue into July?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yes. Thanks, David. Great question. I don't think the sentiment in this earnings season has been that pricing has been a bit more challenging in certain areas, certainly aviation, which we can talk about that later. Think when we look at the D and F program, you know we're a verticalized leader.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

So that means we get a better pricing, better rates, better conditions. We built this book over the last five, six years, multiple years of compound increases. When we think about loss ratios, they've been in the low 40s, so really profitable book of business. Margins are incredibly robust. That said, I think you've got to differentiate between leaders and the subscription market.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

So for leaders, and we're one of the bigger players in that market, we've seen flat to maybe off 10 on some business. But what we're able to do is kind of reallocate capacity into different structures, different areas of structures to maximize the margin. And we're not going to follow the market down. We're not prepared to write inadequately priced business. So I think we are seeing high retention rates, something around 90% for the year.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We're very relevant to the brokers and clients, which really gives us strength in terms of our distribution network. And that's a real driver to our success. I think we're seeing more of the same, but we're also seeing new business coming in into the E and S out of the abitty market and some of the pricing there is actually an increase. So I think what you'll see from us is slightly better RPI's than market. Number one, because we're a leader.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

And yes, you'll see headline prices from brokers with people with very small lines that are price takers, not price makers well into the double digit reductions. And we have we know that's happening. Not the same for a leader where you can cross sell leverage a line size. But it's certainly under a bit more pressure. It's going to be more difficult to grow.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

But we have a fantastic portfolio that's been very, very profitable.

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Got it. Understood. And is it Lloyd's syndicates that are being more competitive and sort of impacting the market there, just as a follow-up to what you were saying there earlier?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yeah. David, I think we've talked about this before. It's people who have smaller line sizes and don't have the leverage, who can't cross sell, that join the party a bit late. And they're really in the subscription world, and they're fighting over a much smaller percentage of the overall structural placement. And they're they're very competitive.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

But we're we're not in that world, and we're not following them down into those sort of reductions because we don't operate in that space. So, yes, it's more difficult. But then you have to leverage your relationships. And we're well placed because we worked hard with the clients when they needed us.

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Got it. Thanks. And then I guess just for my follow-up, I think last quarter you had talked about timing of a renewal in the insurance segment that shifted from 1Q to 2Q. Just wondering if we sort of normalized for that, I think the growth was flat, down a little bit in the insurance segment. Is that sort of a good way to think about the growth?

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Or is there just more lumpiness and pipeline of ABF deals and stuff like that that might be coming through in the back half of the year that will get you up the 6% to 10% for the full year?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yes. I mean, it's a good question. As you know, and it's one way to think about it. But in our portfolio, as with others, you know, there is a movement between courses, especially some of those specialty lines. So I I think we we don't think about it on that quarterly basis.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

We look at it across the year. We know it's going to renew. It just moved from one section into another. But I wouldn't read too much into that. What I would say is just remember, you know, we are we have a optimized portfolio, but we're not going through our underpriced business.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

And I think specifically in areas like aviation, we've been disappointed in the pricing given the lost activity in the last sort of 18. But as I said, just beginning to see some green shoots in the whole risk sector, and we're watching that. So the answer to your question is we've got a strong pipeline. We're very comfortable that we can hit our through the cycle targets and hit our growth estimates.

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Understood. Thank you.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Thanks, David.

[Operator]

Your next question comes from Pablo Singzon with JPMorgan. Your line is open.

[Pablo Singzon, Executive Director at J.P. Morgan]

Hi, good morning. First question, you've been consistently releasing property reserves like a lot of other insurers, which I think is a reflection of the strong pricing environment and as well as your good underwriting. Can you give us a sense of how long it takes for property reserves to fully heat? And I know there are short dated rights, but maybe perhaps just to distinguish between the major lines you write like DNS or property cat. I just want to get some sense of potential reserve releases down the line.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Pablo, it's Alan. I'll start and I'll pass over to Johnny. If I understand your question you're asking about our Reinsurance segment and our CAC positive prior year development. Yes, that book is performing extremely well. We had positive prior year development in the quarter of $24,000,000 both on prior cats and on attritional type experience in the reinsurance segment.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

And we don't forecast prior year development. We book as we see the results coming through. And in that segment, you certainly see the results coming through quite quickly. I'll pass it over to John if you have any further comment.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

Yes, I couldn't hear you too, Pablo. So apologies if this isn't where you were aiming and let me know. But as a short tail writer, our prior development is more driven by the loss experience we get. So claims coming through in the quarter or an absence of claims in the quarter. It's not really driven by us moving assumptions around or making changes to methodology.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

So actually, if you think about the consistent PYD we've seen across reinsurance and across our attritional experience more generally over the past couple of years, that's really the assumptions having saying more IBNR margin at the end of the year than the claims we actually see coming through in the following year and that's what's generated it. So although we didn't plan for any PYD, think if you look consistently, it's come through in the past couple of years.

[Pablo Singzon, Executive Director at J.P. Morgan]

Got it. And second question, maybe for Alan. There was a comment in the press release about an updated estimate of auto reinsurance recoveries. Can you talk about that for a bit?

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

Yes, I can take that one as well, Pablo. It's Johnny here. So there was a reallocation of recoveries in the quarter. So recoveries coming out of the reinsurance pillar and going into specialties. There's no overall impact to the overall P and L from that.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

And actually, the number is relatively small in the context of our overall recoveries in 2025. The reason we get any reallocation at all is that some of our outlets programs would cover multiple class of business. They operate on an aggregate basis and they could actually cover multiple events from different accident years. You can have 24 accident year events and 25 accident year events going into the same cover. And whether that generates a recovery, we then allocate that back out to the underlying events.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

So you can have some movement in where the recovery is split if the underlying losses move, in particular if they move between segment or various other changes that can happen there. Now you get most of that would come through the first quarter after a big event, I. E. Q2 this year. So it's not really something I'd expect to see in the future.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

And I think it's important to note that overall our estimate for CAL wildfires, which is the main cat in this year, has actually come down slightly over the quarter when you look at the sum between the two pillars.

[Pablo Singzon, Executive Director at J.P. Morgan]

All right. Thank you.

[Operator]

Thank you, Pablo. We now have Mike Zielinski with BMO. Please go ahead.

[Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets]

Hey, thanks. Good morning. I want to follow-up, I think, the important point you all are making about your RPI or pricing levels being down less than the market. And I think you quantified flat to off 10% in certain property lines because I believe you're a leader on the syndicate. And I think you mentioned cross sell is what you what's causing that.

[Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets]

So I'm just trying to maybe it's too technical, but I'm trying to understand, how that works. Are you saying that the actual pricing that you all receive is better than the rest of the folks in the syndicate because you're writing other lines of business? Or are you taking into account other lines of business you're writing that's getting better pricing? Or maybe just can kind of just elaborate on the technicalities of how this works.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yeah. Thanks, Mark. I think, firstly, you've got to differentiate between a syndicate and the partnership underwriting. The syndicate is a fairly small part of the overall portfolio. So the lead position is really held within the partnership.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

They you know, they're they're the guys that really built the portfolio, you know, back from two thousand and eighteen, nineteen. So when you think about, you know, the daily underwriting calls that we have, maybe two, three times a day, on those calls, if you look at certain clients, you might be selling them terror, casualty, property, and being able to leverage across those three, four, maybe even five different class cross class offerings gives you a differentiated position. So that that's the first thing. Specifically, when you think about the syndicate, they're more of a primary underwriter. As you know, you know, we we only take a 20% variable quota share, so we don't really participate at that end.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

But if the syndicate are offering a primary line, then it helps us leverage the excess play that we've got. So that that's purely for the syndicate, but it also translates back into the the bigger portfolio, which is with the partnership where we can use that as leverage as well. So it's it's leveraging, you know, how you deploy on a particular deal, and then it's leveraging your relationships with the brokers and the clients, and it's leveraging the fact that you're selling multi class products to those clients. And you're making the price. You are the price maker on those deals.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

It's a very different outcome than actually just being a subscription market, asked to write a couple of million dollars at the end, take it or leave it.

[Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets]

Okay. That's very helpful. And my follow-up in the prepared remarks, I believe, might have been Dan said that PMLs are under 10% of equity for certain events at one in 101 in two fifty. Is there could you offer a rough corresponding industry loss for those events? Like does a one in 100 mean a $30,000,000,000 event? Or if you can help us with that.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Mike, it's Alan. Yeah. We don't really think about the industry loss. Again, this is a ground up model where we work through our PMLs based on various metrics. It is a verticalized market that we participate in as discussed, so it really is not based on industry losses.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

It's based on our portfolio, and it's it's again, it's driven by down a ground up analysis for those particular two key natural perils.

[Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets]

Yeah. It's Johnny here and it really varies by peril as well. If you think about the wildfires that was probably 40,000,000,000 to $50,000,000,000 loss taking various points from the market. And some people would have that on their wildfire model out of the one in 500 for example. But obviously if you've got a 40 or $50,000,000,000 wind loss into Florida that would be a much shorter term period than that.

[Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets]

So it's quite difficult to assign industry loss to any particular return period. You really need to think about the peril and think about your own view of risk around that at the same time as well. Okay, got it.

[Pablo Singzon, Executive Director at J.P. Morgan]

Yeah, guess, yeah, I think you're describing and we're appreciating why I think it's tougher sometimes investors to make good use of the PML data that companies provide, which we appreciate that it's provided.

[Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets]

Got it. Thank you so much.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Thanks, Mike.

[Operator]

Thank you. We now have Alex Scott with Barclays. Your line is open.

[Alex Scott, Equity Research Analyst at Barclays]

Hi, good morning. First one I have for you is just on some of the comments you made on aviation and the price adequacy there and some of the actions you're taking. Can you talk about what kind of impact you expect that to have on premium growth? Like how much of that's been completed already versus maybe we need to consider that over the next twelve months in premium growth?

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yeah. I think when where it's gonna be difficult to grow in aviation unless we see those green shoots really improve the pricing. It just hasn't responded to the overall impact of those losses that we've seen in the all risk sector. When we think about war, since Russia and Ukraine, we've written over a billion dollars of premium with an 11% loss ratio. So we can lean in given that there's rate adequacy and there's good margin in the business.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

The aviation market is there's a lot of activity towards the end of the year. We're hopeful those green shoots will result in an ability to write some new business. But at the moment, we're disappointed in that class of business.

[Alex Scott, Equity Research Analyst at Barclays]

Okay. All right. The MGU commission, can you talk about that a bit? And just I want to understand like how recent results will influence it as we think through the next year or two. Particularly, I think maybe the Russia, Ukraine sounded like it was from before that was set up.

[Alex Scott, Equity Research Analyst at Barclays]

So what are some of the things that have pressured combined ratios that will or won't sort of influence that level?

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Yes. Thanks, Alex. It's Alan. The profit commission with the TFP is on GAAP calendar year numbers. Essentially, there are some adjustments, but they're all sort of calendar and based on the financials you see in front of you.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

So, again, Russia, Ukraine, we we have said is behind us. And as a result, you would think that in 2026, assuming underwriting performance continues to perform in the ranges that we've seen, excluding Russia, Ukraine, there would, of course, be a profit commission to the TFP. Our our interests are aligned with TFP in that. Again, they're gonna write profitable business. And once they meet the hurdle rate, it's based on calendar year results that year.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

There's there is a carry forward mechanism, but there's no loss to carry forward at this point because they've been around a 100% combined ratio in total. So it will not and it it's calendar year calculation. And so in 2026, certainly, but even hopefully in 2025, there will be a a profit commission, but it's based on the actual calendar year underwriting results.

[Alex Scott, Equity Research Analyst at Barclays]

Got it. Thank you.

[Operator]

Thank you. The next question comes from Rob Cox with Goldman Sachs. Please go ahead.

[Robert Cox, VP - Equity Research at Goldman Sachs]

Hey, thanks. I just wanted to ask on the tax rate guidance firstly. It seems like a step up from the mid teens guidance previously. And I just wanted to understand if that's really all just distribution geographically of income there? And would you guys expect a similar rate in 2026 and beyond?

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Rob. It's Alan. Thanks for the question. You got the answer absolutely right for 2025. The tax accounting rules are you project to the end of the year.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Do you think where do you think the profits will be in the three subsidiaries that we have? One in The UK, one in Ireland, one in Bermuda, all have different tax rates. And right now, more of our profits are in our UK operation because of the beginning of the year and how California wildfires impacted Bermuda especially. So we do expect through the rest of the year, it will be a 19% effective tax rate. It's too early to call for 2026.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

We're working through our planning process now. And that's as with all of our peers, we'll work through that in the next three months and and refine it post wind season. At the time when we have figured out where our business plan expectations are for 2026 and we understand which subsidiary those fall in, we'll give you further updates on the tax rate for 2026.

[Robert Cox, VP - Equity Research at Goldman Sachs]

Got it. That's helpful. And just a follow-up on the new share repurchase authorization. Is there any way to think about how you might anticipate using that up in sort of a base case scenario?

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Yeah. It's Alan again. Yeah. There it's a multifactored approach. Again, as we've stated previously, we look at capital management in the whole, and we wanna use our capital to reinvest in the book first and foremost.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

And then we look at our outward reinsurance program, both strategically and tactically. What what are we doing there? And then we look to return capital to shareholders. So there's no easy bullet answer to share buybacks. Obviously, price is an important feature the undervalued rate we're trading at now.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

It's certainly appealing, but it's it's a 200,000,000 authorization that you they can sit out there for up to two to three years. We will look at it on a measured basis based on our capital position and the other factors in our in our thinking, like, as I said, that reinvesting in profitable opportunities and our reinsurance. So I I wish I could give you more strict guidance on that, but we will certainly be at the current share price, you can expect that we will do the right thing.

[Operator]

Thank you. We have another question from Andrew Anderson with Jefferies. Please go ahead when you're ready.

[Andrew Andersen, VP - Equity Research at Jefferies Financial Group]

Hey, thanks. Maybe following up on tax. I think there's been some discussion that there could potentially be offsetting credits to operating expenses in outer years. Are you considering that in any future plans or hearing of that?

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

Yes. Thanks, Alan, again. That's I believe you're referring to Bermuda tax law. And in the accounting world, you can't really record any offsetting credits until the government actually passes tax law changes. We haven't seen those credits come through yet.

[Allan Decleir, Group CFO & Executive Director at Fidelis Insurance Holdings]

We are anxiously awaiting to see what it will be, but now right now, we're not taking credit for those, and we are not first we're not predicting those. And when the legislation change, we will put that into the mix and that will affect our effective tax rate. But nothing is considered at this point.

[Andrew Andersen, VP - Equity Research at Jefferies Financial Group]

Okay. And then on the asset backed finance and credit portfolio, can you maybe talk about the sensitivity to interest rates there either on the loss ratio or premium growth outlook?

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

Yes. Johnny here. I'll take the loss ratio a bit. I mean, obviously, that type of portfolio, we're trying to get diversification. So we wouldn't want exclusive exposure to interest rate.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

We'd be trying to balance geographically, balanced amongst different economic factors as well to really build out a diversified portfolio. Obviously, when we price and do exposure management on there, we'd run a number of scenarios around sensitivities to a number of different economic variables to ensure that we're happy with the overall exposure. So I would say us thinking about things like that, it's really a core part of the portfolio. And if you think about how it's been tested over time, we've seen a pretty severe shock on interest rate in the last few years. Haven't seen any real material loss coming through from that at all.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

In terms of other economic variables it's been tested against. I think COVID is probably one of the biggest tests it could have got. If you think about before COVID, that that would be that kind of scenario is the thing that would worry us on that book, you know, something that impacted the globe, something that impacted a number of different variables at the same time. And the book actually came through that extraordinarily well. We had almost no loss at all from COVID.

[Jonny Strickle, Group Managing Director at Fidelis Insurance Group]

It's in the low 30s in terms of loss ratio across that period in aggregate. So I'd say we're really comfortable with the level of risk and the pricing adequacy in that class as a whole.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Yes. And it's Dan here. Just to add to that,

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

I think the other thing, the daily underwriting calls when we think about interest rates, the tariffs, the impact, we're able to make adjustments in real time. So on a daily basis, the underwriters are able to reprice, readjust their thoughts on how the deal should be structured every single day. So that's a really important difference for us that we can do that in real time.

[Andrew Andersen, VP - Equity Research at Jefferies Financial Group]

Thank you.

[Operator]

Thank you. I can confirm that does conclude the question and answer session today. And I'd like to turn the call back to Dan Burrows for closing remarks.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Thank you. Well, we appreciate everyone joining us today. Thank you very much. And as usual, if anyone has any additional questions, we're here to take your calls. We thank you all for your ongoing support, your really good questions.

[Daniel Burrows, Group CEO & Executive Director at Fidelis Insurance Holdings]

Enjoy the remainder of your day and hope to speak to you soon. Take care. Bye bye.

[Operator]

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Miranda Hunter, Head - IR
• Daniel Burrows, Group CEO & Executive Director
• Allan Decleir, Group CFO & Executive Director
• Jonny Strickle, Group Managing Director

Analysts

• Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)
• Leon Cooperman, Chairman and CEO at Omega Family Office
• David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI
• Pablo Singzon, Executive Director at J.P. Morgan
• Michael Zaremski, MD & Senior Equity Research Analyst at BMO Capital Markets
• Alex Scott, Equity Research Analyst at Barclays
• Robert Cox, VP - Equity Research at Goldman Sachs
• Andrew Andersen, VP - Equity Research at Jefferies Financial Group