By David Bull

Feb 25 - (The Insurer) - Fidelis Insurance Group reported a fourth-quarter operating net loss of $117.7 million or -$1.05 a share that was worse than Wall Street’s consensus forecast of -$0.73 a share that had been adjusted to reflect a preannounced $287.2 million charge relating to its aviation and aerospace line of business.

The profits warning last week included the charge in relation to the 2021 and 2022 underwriting years impacted by ongoing Russia-Ukraine aviation litigation.

In its Q4 earnings release Tuesday, the Bermudian carrier reported an underwriting loss for the period of $177.6 million and a combined ratio of 128.0%, compared to underwriting income of $94.4 million and a combined ratio of 81.4% in the prior-year period.

Cat and large losses for the quarter were $133.2 million compared to $100.9 million in Q4 2023, while overall net adverse prior-year loss reserve development was $270.3 million, compared to $15.1 million of net favourable development in the prior-year period.

Gross premiums written (GPW) for the quarter climbed 21.7% to $953.7 million, while other metrics in the reporting period included net investment income that was up from $38.7 million to $51.4 million.

By segment, Fidelis’ insurance business reported GPW up 19% to $921.9 million, with net premiums written down 2% to $525.0 million and net premiums earned up 26% to $542.9 million.

The underwriting ratio, as Fidelis characterises it, almost doubled from 66.0% to 123.5% with a loss ratio that surged from 43.3% to 88.4% and a policy acquisition expense ratio that was up from 22.7% to 35.1%.

The higher loss ratio included a decreased impact from cats and large losses from 21.5% to 15.2%, while the reserve charge added 51.8 percentage points.

Fidelis said that the increase in allowance related to the Ukraine conflict was largely related to ongoing settlement discussions over litigation as well as an increase to reserves to reflet recent developments and new information received.

The company said top line growth came from new business in its asset backed finance and portfolio credit book as well as in marine lines.

The reinsurance segment fared better in absolute terms in what is typically the smallest quarter for the business in the wider market, but its underwriting ratio almost doubled from 33.7% to 60.9%.

GPW were $31.8 million, up from $7.9 million, with NPW at -$46.3 million, compared to $16.0 million in Q4 2023, while NPE climbed from $77.6 million to $91.6 million.

For the full year on a group-wide basis, the company generated an underwriting profit of $8.3 million, with a combined ratio of 99.7%, compared to underwriting income of $327.3 million and a combined ratio of 82.1% in 2023.

The full-year results included cat and large losses of $509.0 million, up from $288.2 million in 2023, with net adverse prior year loss reserve development of $124.6 million, compared to net favourable development of $62.9 million in the prior year.

Fidelis also reported commissions in relation to The Fidelis Partnership of $62.1 million for the quarter and $311.1 million for the full year, down from $77.9 million for the quarter and up from $22.3 million for the year.

Fidelis reported net investment income for the quarter that climbed from $38.7 million to $51.4 million, with a net investment return of $39.3 million, down from $46.0 million. For the full year, net investment income was up from $119.5 million to $190.5 million, and from $124.4 million to $161.9 million on a net investment return basis.