Fidelis Insurance Holdings Ltd. Q2 FY2024 earnings call

Dan Burrows:

• Second quarter marks one-year anniversary as public company; solid quarter with capital deployment and return of excess capital.
• 24.7% growth in gross premiums written, RPI 112%, mature hard market conditions persist.
• Ceased underwriting intellectual property due to losses; completed $50M share repurchase, new $200M repurchase authorized.

Allan Decleir:

• Operating net income $63M, $0.54 per diluted share, annualized operating ROE 10%, book value per share $21.71.
• Net investment income $46M, rotated investment portfolio by selling low-yield securities and reinvesting at higher yields.

Jonny Strickle:

• Gross premiums written up 24.7% to $1.2 billion, combined ratio 92.7%, year-to-date combined ratio 89.3%.
• Loss ratio 44.4%, including attritional, catastrophe/large losses, and prior year development; IP losses contributed 8 points to combined ratio.
• Underwriting focus on short-tail specialty lines, expenses discussed, market outlook for mature hard market to persist.

Specialty Segment: Gross premiums written grew 15.1% ($99.2 million), with RPIs of 114%. Property Direct and Facultative saw a 37.4% ($138.3 million) increase, but Aviation had down premiums due to underwriting criteria. Bespoke Segment: Grew $35.9 million driven by structured credit, but IP losses led to ceasing underwriting; remaining exposure to a few live IP policies. Reinsurance Segment: Gross premiums written grew $100.9 million, RPI 107%, growth in North American property book, pricing attractive in international property after typhoon-impacted years.

Guidance:

• Full-year premium growth in line with prior year.
• Operating ROAE expected in 14%-16% range.
• Combined ratios targeted mid to high 80s throughout cycle.
• New $200 million share repurchase program authorized.

Risks:

• Intellectual property losses impacting combined ratio.
• Catastrophe and large losses affecting results.
• Market conditions changing, potentially impacting underwriting and pricing.
• Reinvestment risk in investment portfolio due to market fluctuations.

Q: Mike Zaremski asked about ROE seasonality and IP losses' impact on MGU ceding commission ratio.

A: Allan Decleir responded on ROE seasonality and ceding commission alignment with underwriting results.

Q: Michael Ward asked about remaining IP exposure and D&F growth runway.

A: Jonny Strickle discussed remaining IP exposure (~third of portfolio) and D&F growth with mature hard market conditions persisting.

Q: Andrew Andersen asked about IP policy basis and Bespoke growth runway.

A: Jonny Strickle and Allan Decleir responded on IP policy basis (occurrence) and Bespoke pipeline strength.

Q: Pablo Singzon asked about Property D&F underwriting approach and investment portfolio repositioning.

A: Jonny Strickle and Allan Decleir discussed D&F underwriting unchanged and investment portfolio optimization for higher yields.

Q: Meyer Shields asked about casualty participation and Bespoke net-to-gross ratio.

A: Allan Decleir and Jonny Strickle responded on no casualty participation and Bespoke ratio variation by product type.