• Gross Premiums Written: Increased by 25% to $742 million for the quarter.
• Year-to-Date Gross Premiums Written Growth: Increased by 23%.
• Combined Ratio: 87.4% for the quarter; year-to-date combined ratio is 88.6%.
• Annualized Operating ROAE: 16.4% for the quarter; year-to-date annualized operating ROAE is 13.3%.
• Operating Net Income: $105 million or $0.92 per diluted common share.
• Book Value Per Diluted Common Share: $23.43, an increase of 13% from year-end.
• Net Premiums Earned: Increased by 24% to $635 million compared to the third quarter of 2023.
• Loss Ratio: 37.5% for the third quarter.
• Attritional Loss Ratio: Improved to 24.7% from 30.4% in the prior year period.
• Catastrophe and Large Loss Ratio: 14.4% or $92 million of losses in the quarter.
• Net Investment Income: Increased to $52 million for the third quarter of 2024.
• Share Repurchase Program: Year-to-date repurchase of 6.6 million common shares at an average price of $16.06.

• Warning! GuruFocus has detected 7 Warning Signs with MIAPF.

Release Date: November 13, 2024

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

Positive Points

• Fidelis Insurance Holdings Ltd (NYSE:FIHL) reported a 25% increase in gross premiums written for the third quarter, demonstrating strong top-line growth.
• The company achieved a combined ratio of 87.4% for the quarter, indicating strong underwriting profitability.
• Fidelis Insurance Holdings Ltd (NYSE:FIHL) maintained a robust capital management strategy, returning $141 million to shareholders through dividends and share buybacks.
• The company reported an annualized operating return on average equity (ROAE) of 16.4% for the quarter, showcasing strong financial performance.
• The launch of Lloyd's Syndicate 3123 created new business opportunities, contributing to growth across all segments, particularly in bespoke.

Negative Points

• The specialty segment experienced adverse prior year development of $14 million, driven by increased estimates in the aviation and aerospace lines due to ongoing Russia-Ukraine litigation.
• Policy acquisition expenses increased to 31 points of the combined ratio, up from 29.6 points in the prior year, primarily due to higher variable commissions in the specialty segment.
• The company faced a catastrophe and large loss ratio of 14.4% in the quarter, with notable events including Hurricane Helene and European Storm Boris.
• Despite strong growth, the aviation market remains competitive, and some expected rate increases did not materialize, impacting new business opportunities.
• The company did not disclose the exact amount of excess capital, which may leave investors uncertain about future capital management strategies.

Q & A Highlights

Q: Can you elaborate on the adverse development in the aviation business and the methodology used for setting reserves? A: The adverse development in specialty was driven by increases in aviation and aerospace due to Russia-Ukraine litigation. Our reserving methodology remains robust and consistent, with no changes in approach. However, specific dollar amounts for aviation reserves are not disclosed. - Allan Decleir, CFO

Q: How do you view the competitive landscape in the London market, especially in aviation? A: We maintain a leadership position, which provides leverage for better terms and conditions. Despite competition, particularly in aviation, we see opportunities in direct property and maintain a disciplined approach to underwriting. - Dan Burrows, CEO

Q: How do you assess the relative attractiveness of stock repurchase versus writing more business? A: We prioritize supporting profitable underwriting growth while also considering share buybacks when the stock is undervalued. This year, we've balanced 25% growth with $141 million returned to shareholders. - Dan Burrows, CEO

Q: Can you explain the higher acquisition ratio this quarter and its future outlook? A: The increase was driven by higher variable commissions in the specialty segment. These are linked to profitability and are expected to be lumpy, not indicative of a new run rate. We anticipate a return to a 28%-29% acquisition ratio. - Allan Decleir, CFO

Q: How do you view the relationship between large and attritional losses? A: We focus on the overall combined ratio rather than distinguishing between loss types. Attritional losses can appear artificially low or high due to threshold shifts, so we take a holistic view of profitability. - Jonathan Strickle, Chief Actuarial Officer

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