Earning Date, Transcript Summary & Report

Financial Performance Metrics: In 2024, Fidelis generated a combined ratio of 99.7%, operating net income of $137 million, and an operating return on average equity of 5.6%.

Premiums Written Growth: Gross premiums written increased by 23% to $4.4 billion, driven by strong performance in Direct Property, Marine, and Structured Credit Insurance portfolios.

Renewal Pricing Index Achievement: The company achieved a Renewal Pricing Index (RPI) of 111% for the full year, indicating effective pricing strategies across its portfolio.

Premiums Growth Achievement: Direct Property gross premiums written increased by 30%, showcasing the company's ability to leverage its lead position in the market.

Reinsurance Premium Growth: Reinsurance premiums grew by 40%, capitalizing on favorable market conditions and demonstrating strong demand for capacity.

Net Investment Income Surge: Net investment income rose by 59% to $191 million, reflecting an increase in investable assets and higher yields on fixed income portfolios.

Shareholder Capital Return: Fidelis returned $152 million of excess capital to shareholders through dividends and share buybacks, highlighting its commitment to shareholder value.

Underwriting Discipline and Retention: The company maintained a disciplined approach to underwriting, achieving strong retention rates and diversifying its portfolio with new business opportunities.

Attritional Loss Ratio Improvement: The attritional loss ratio improved to 23.2% for the full year, indicating effective portfolio optimization and risk management strategies.

Reinsurance Agreement Renewal: Fidelis successfully renewed its 20% whole account quota share agreement with Travelers for the third consecutive year, demonstrating strong relationships in the reinsurance market.

Net Prior Year Development: Incurred $287 million in net prior year development in Aviation and Aerospace due to the ongoing Russia-Ukraine conflict, impacting business underwritten in 2021 and 2022.

Combined Ratio Analysis: Reported a combined ratio of 99.7%, which does not align with through-the-cycle expectations, indicating potential inefficiencies in underwriting or claims management.

Adverse Development Impact: Net adverse prior year development of $270 million in Q4, compared to net favorable development of $15 million in the same period last year, highlighting a significant deterioration in performance.

Wildfire Loss Projections: Catastrophe losses related to California wildfires expected to be in the range of $160 million to $190 million, indicating vulnerability to natural disasters and climate change impacts.

Rising Policy Acquisition Costs: Policy acquisition expenses increased significantly to 33.6 points of the combined ratio for the quarter, compared to 23.7 points in the prior year, suggesting rising costs in acquiring new business.

Securities Sale Loss: The company reported a realized loss of $5 million from the sale of securities, indicating potential challenges in investment performance during the quarter.