• Combined Ratio: 99.7% for 2024.
• Operating Net Income: $137 million for 2024.
• Operating Return on Average Equity: 5.6% for 2024.
• Net Prior Year Development: $287 million adverse in aviation and aerospace line.
• Gross Premiums Written: Increased 23% to $4.4 billion for 2024.
• Renewal Pricing Index (RPI): 111% across the portfolio for 2024.
• Net Investment Income: $191 million for 2024, a 59% increase from 2023.
• Capital Returned to Shareholders: $152 million through dividends and share buybacks in 2024.
• Catastrophe Losses from California Wildfires: Estimated $160 million to $190 million.
• Gross Premiums Written (Q4): $954 million, a 22% increase from the same quarter last year.
• Net Premiums Earned (Q4): Increased by 25% compared to Q4 2023.
• Combined Ratio (Q4): 128%.
• Net Investment Income (Q4): $51 million, up from $39 million in Q4 2023.
• Book Value Per Share: $21.79, a 5.3% increase from the end of 2023.

• Warning! GuruFocus has detected 3 Warning Sign with SII.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fidelis Insurance Holdings Ltd (NYSE:FIHL) achieved a 23% growth in gross premiums written, reaching $4.4 billion, driven by strong performance in direct property, marine, and structured credit insurance portfolios.
• The company maintained a strong capital position, returning $152 million to shareholders through dividends and share buyback programs.
• Net investment income increased by 59% to $191 million, supported by higher earned yields on fixed income portfolios and cash balances.
• Fidelis Insurance Holdings Ltd (NYSE:FIHL) successfully de-risked two-thirds of its exposure related to the Russia-Ukraine conflict in its aviation and aerospace line, providing increased certainty to shareholders.
• The company reported a strong renewal pricing index (RPI) of 111% across its portfolio for the full year, indicating favorable market conditions and effective pricing strategies.

Negative Points

• Fidelis Insurance Holdings Ltd (NYSE:FIHL) incurred $287 million in net prior year development in its aviation and aerospace line due to the ongoing Russia-Ukraine conflict, impacting overall financial performance.
• The combined ratio for the fourth quarter was 128%, significantly higher than the company's target, driven by adverse prior year development and catastrophe losses.
• The company faced a significant impact from the California wildfires, with expected catastrophe losses ranging from $160 million to $190 million.
• Operating net income of $137 million and an operating return on average equity of 5.6% did not meet the company's long-term expectations.
• The insurance segment experienced an increase in policy acquisition expenses, primarily due to higher variable commissions and changes in the business mix.

Q & A Highlights

Q: Dan, regarding the recent wildfires, were there any lessons learned, and how might this affect your underwriting approach? A: The wildfires were a significant event, estimated at a 1 in 500 return period. Our loss was within our budget and expectations. The event will likely positively impact pricing. Our approach, including reinsurance purchasing, worked as intended, and we will continue to look for opportunities arising from such events. - Dan Burrows, CEO

Q: Allan, regarding the lack of performance fees for 2024, is there any carry forward impact to 2025 or beyond? A: The profit commission for 2024 is zero, and the framework agreement is working as intended. There is no deficit to carry forward into future years. We will accrue profit commissions quarterly based on underwriting results. - Allan Decleir, CFO

Q: Are you anticipating any subrogation recoveries from the wildfires? A: It's too early to provide details, but typically, such events would lead to subrogation recoveries. We will update as more information becomes available. - Dan Burrows, CEO

Q: Could you discuss the impact of the aviation and aerospace reserves on your financials? A: We've de-risked our exposure by settling or entering settlement discussions for two-thirds of the total exposure. The remaining one-third is reserved based on a probabilistic model. Our balance sheet remains strong, supporting strategic growth and capital management. - Dan Burrows, CEO

Q: How should we think about net premium growth in 2025 given the increased seating ratio? A: Net premium earned is expected to grow between 15% and 20%, while written premiums will grow by 10%. The timing of reinsurance purchases and assumed business affects these figures. - Allan Decleir, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.