Pelagos Insurance Capital reported $83 million in operating net income for the third quarter of 2026 as premium growth and share repurchases helped lift book value, even as conflict-related losses weighed on underwriting results.
Operating earnings were $1 per diluted share, and annualized operating return on average equity was 15.3%, Chief Financial Officer Allan Decleir said on the earnings call. Gross premiums written rose 5.3% from a year earlier to $840 million, while diluted book value per share excluding accumulated other comprehensive income increased 12% from year-end to $27.11.
Management expects the fourth quarter to be its strongest growth quarter of the year, putting full-year premium growth at the high end of its previously communicated mid-single-digit range. CEO Dan Burrows said a similar growth rate was possible in 2027, though he cautioned that it was too early to provide detailed guidance.
Conflict Losses and Marine War Business
Pelagos posted a third-quarter combined ratio of 91.5%, compared with 92.4% for the first nine months of 2026. Catastrophe and large losses totaled $116 million, or 14.8 points of the quarterly combined ratio, and were all recorded in the insurance segment.
Decleir said those losses were primarily related to conflicts in the Black Sea and Middle East. The Black Sea losses arose from business written before the recent re-escalation in the region, he said.
Insurance segment gross premiums written increased 13% in the quarter, driven by marine war and diversification into lower-volatility lines. Group Managing Director Jonny Strickle said premiums for risks in live conflict zones had risen by multiples from pre-conflict levels, more than offsetting the increased risk in the company’s assessment.
The marine war breach business written since the conflict began had a loss ratio below 20%, Strickle said. However, including business written before the conflict, the overall war book was running at a loss ratio in the mid-40s for the year, roughly in line with the company’s plan. He said the war had not boosted overall insurance segment profitability.
Pelagos also recorded $5 million of net adverse prior-year development in the quarter, primarily related to political risk, violence and terror business. Strickle said an update to a 2025 accident-year loss pushed it into a layer covered by Pelagos. For the first nine months, the company reported $31 million of favorable prior-year development.
Partner Network and Growth Outlook
Burrows said Pelagos had bound more than $400 million in premiums outside The Fidelis Partnership during the first three quarters of 2026. Strickle said the expanding network of underwriting partners represented about 10% of year-to-date gross premiums written.
Burrows said the company had 16 partners and had previously indicated that new partners could account for 20% to 30% of the overall portfolio in coming years. He emphasized that Pelagos does not set a firm target for that mix and would focus on underwriting opportunities that meet its return requirements.
In reinsurance, third-quarter property premiums declined largely because one client restructured its outward program, Burrows said. Excluding that effect, premiums would have been broadly flat. Pelagos expects some of the premium to return through a different program early next year.
For the fourth quarter, Decleir forecast net premiums earned of $550 million to $600 million in insurance and $85 million to $105 million in reinsurance.
Capital Returns and Investments
Pelagos returned $95 million to shareholders during the third quarter, including $83 million in share repurchases. The repurchases included $35 million in a privately negotiated transaction with founding shareholder Pine Brook.
The board replenished the company’s share repurchase authorization to $400 million and raised the quarterly common dividend to $0.22 per share. In the first nine months of 2026, Pelagos repurchased $363 million of shares and returned more than $400 million to shareholders including dividends, Decleir said.
Net investment income was $45 million for the quarter, unchanged from the preceding quarter. The company also recorded $27 million of net realized and unrealized investment losses affecting its income statement, primarily because of rising interest rates on fixed-income investments.
About Fidelis Insurance (NYSE:FIHL)
Fidelis Insurance Holdings Limited is a Bermuda-based specialty insurer and reinsurer that provides coverage for complex and evolving risks. The company operates internationally, working with brokers and clients across a range of markets. Its offerings include property, energy, marine, aviation, and specialty insurance and reinsurance, as well as coverage for risks such as political violence and cyber events. Its underwriting businesses serve commercial and institutional customers seeking tailored protection.
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