Fidelis reports stronger combined ratio as FY23 GPW rises to $3.6bn

Fidelis Insurance Holdings Limited, the Bermuda-domiciled re/insurer, has reported underwriting income of $327.3 million and a combined ratio of 82.1% for the full-year 2023, compared to $120.4 million and a combined ratio of 91.9% a year earlier, driven by premium growth in the specialty segment and significantly lower catastrophes and large losses.

Net income for the year was $2.1 billion, which includes a net gain on the distribution of Fidelis MGU of $1.6 billion and the establishment of a net deferred tax asset of $90 million related to the enactment of Bermuda’s corporate income tax.

For the year, operating net income hit $398.9 million, up 346% year-on-year, as the operating ROE and operating ROAE increased to 22.2% and 18.8%, respectively, driven by significant increases in both underwriting income and investment income.

Investment income totalled $119.5 million in 2023 compared with $40.7 million a year earlier.

In terms of growth, Fidelis has reported gross premiums written (GPW) of $3.6 billion for 2023, up 19% on 2022, as net premiums earned rose 22% to $1.8 billion.

Across the group, catastrophe and large losses decreased 43% from 2022’s $378.9 million to $215.3 million, related primarily to the Sudan Conflict, losses in connection with the Viasat-3 satellite deployment failure, losses from severe convective storms in the U.S., and other loss events in various lines of business including Property D&F, Energy, and Marine.

Net favourable prior year reserve development increased from $22.1 million in 2022 to $62.9 million in 2023, contributing to the 9.8 percentage point improvement in the combined ratio to 82.1% for the year.

By segment, and starting with the company’s reinsurance business, GPW increased slightly to $617.3 million, as reinsurance premiums ceded fell slightly to $362.2 million, net premiums written rose almost 21% to $255.1 million, and net premiums earned came down 13% to $253.7 million.

Catastrophe and large losses within the reinsurance division decreased 72% year-on-year to $34 million, related primarily to the Hawaii wildfires, severe convective storms in the U.S., and Cyclone Gabrielle in New Zealand.

Reinsurance underwriting income improved significantly year-on-year, from $4.4 million in 2022 to $161 million in 2023, as the reinsurance underwriting ratio fell by 61.9 percentage points to $36.5%.

In the firm’s specialty arm, GPW rose by more than $625 million to $2.2 billion, as net premiums written rose to $1.5 billion and net premiums earned increased to $1.2 billion, driven by new business, strong renewals, and rate increases in the Property D&F, Marine and Aviation and Aerospace lines of business.

Catastrophe and large losses in the specialty arm fell by almost $60 million to $161 million, as the specialty segment underwriting income rose by $180 million to $331.1 million in 2023.

In Fidelis’ bespoke business, GPW fell from $796 million in 2022 to $720 million in 2023, as net premiums written came down by $151 million to $416 million, and net premiums earned fell slightly to $375.6 million.

Large losses within this part of the business decreased $34.1 million year-on-year to $20.4 million, as underwriting income spiked by $13 million to $143.2 million.

Dan Burrows, Group Chief Executive Officer, commented, “The fourth quarter was a strong finish to a milestone year for Fidelis in which we became a public company and strengthened our position as a global specialty insurer. Utilizing our nimble yet disciplined approach, we capitalized on attractive opportunities, achieved strong rate increases, and delivered excellent financial performance, including a combined ratio of 81.4% and annualized Operating ROAE of 23.6% in the fourth quarter, as we continued to execute against all aspects of our strategy.

“We are entering 2024 with strong momentum. Across core lines, we expect hard market conditions to continue, and we remain focused on actively managing our capital to foster sustainable growth and maintain our track record of best in class underwriting performance. With our lead market position and balance sheet strength, we are well positioned to continue delivering long-term profitable growth and shareholder value.”

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