Fidelis Insurance Group Reports 2023 Fourth Quarter Results

Rhea-AI Summary

Fidelis Insurance Holdings Limited (FIHL) reported strong financial results for the fourth quarter and full year 2023, showcasing substantial growth in gross premiums written and net income. The company achieved a combined ratio of 81.4% in Q4 and 82.1% for the full year, indicating improved underwriting performance. Operating ROE and ROAE also saw significant increases, reflecting the company's strategic execution and financial strength. The successful completion of the IPO on the NYSE further bolstered FIHL's financial position, raising $89.4 million in net proceeds.

Insights

Financial Analyst

The reported financial results for Fidelis Insurance Holdings Limited (FIHL) exhibit a robust performance in the fourth quarter and full year of 2023. A 31.7% growth in gross premiums written indicates strong demand for the company's insurance products, which is a positive signal for investors. The combined ratio of 81.4% is notably efficient, as it is below 100%, meaning that the company is earning more in premiums than it is paying out in claims and expenses. This is a key metric in the insurance industry, as it directly impacts profitability.

The increase in book value per share by 13.4% over the quarter and the substantial growth in operating net income reflect a solid financial position and operational efficiency. The Operating Return on Equity (ROE) and Operating Return on Average Equity (ROAE) are particularly strong, signaling to investors that the company is generating significant profit relative to its equity base. This is often interpreted as a measure of management's effectiveness in using shareholders' funds. The IPO completed in July 2023, which raised $89.4 million, further solidifies the company's capital structure and supports future growth initiatives.

Market Research Analyst

The insurance sector is characterized by cycles of 'hard' and 'soft' market conditions, with 'hard' markets featuring higher premiums due to reduced supply. FIHL's expectation of continued hard market conditions suggests that the company may be able to maintain or increase premium levels, potentially leading to continued revenue growth. The company's specialty insurance focus likely contributes to its ability to command higher premiums and achieve strong rate increases.

FIHL's positioning as a global specialty insurer, combined with its disciplined underwriting approach, has enabled it to capitalize on market opportunities and deliver above-average financial performance. The company's lead market position and balance sheet strength are strategic advantages that should enable it to navigate market uncertainties and potentially outperform competitors. This is particularly relevant in the context of geopolitical instability, inflation and rising interest rates, which can impact claims costs and investment returns in the insurance industry.

Insurance Industry Expert

The combined ratio, which measures incurred losses and expenses divided by earned premiums, is a critical indicator of an insurer's profitability. FIHL's improvement in the combined ratio from the previous year demonstrates effective cost control and underwriting discipline. The net favorable prior year loss reserve development suggests that the company had conservatively estimated its loss reserves in the past, which is now resulting in releases that boost profitability.

FIHL's focus on specialty insurance segments such as Property D&F, Marine and Aviation and Aerospace is significant. These lines of business typically involve complex risks that require specialized underwriting expertise, which can lead to higher margins. The company's performance in these segments, as indicated by the underwriting income and loss ratios, suggests it has effectively managed these complex risks. The attritional loss ratio, which excludes catastrophic and large losses, provides insight into the underlying performance of the insurance portfolio and FIHL's results show a favorable trend.

Fourth Quarter 2023 Highlights:

• Gross premiums written of $783.9 million; growth of 31.7% from the fourth quarter of 2022
• Combined ratio of 81.4%
• Annualized operating return on opening common equity (“Operating ROE”) of 25.2% and operating return on average common equity (“Operating ROAE”) of 23.6%
• Net income of $228.3 million, or $1.93 per diluted common share and operating net income of $135.4 million, or $1.15 per diluted common share
• Book value per diluted common share was $20.69 at December 31, 2023, an increase of 13.4%, compared to September 30, 2023

Full Year 2023 Highlights:

• Gross premiums written of $3.6 billion; growth of 18.6% from full year 2022
• Combined ratio of 82.1%; improvement of 9.8 points from full year 2022
• Operating net income of $398.9 million, or $3.49 per diluted common share
• Net income of $2.1 billion, or $18.65 per diluted common share
• Operating ROE of 22.2% and Operating ROAE of 18.8%
• IPO completed on the NYSE on July 3, 2023, raising $89.4 million in net proceeds through the issuance of 7,142,857 common shares at $14.00 per common share

PEMBROKE, Bermuda--(BUSINESS WIRE)-- Fidelis Insurance Holdings Limited (“Fidelis” or “FIHL” or “the Group”) (NYSE: FIHL) announced today its financial results for the fourth quarter ended December 31, 2023.

Dan Burrows, Group Chief Executive Officer, said “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.”

Fourth Quarter Consolidated Results

• Net income available to common shareholders for the fourth quarter of 2023 was $228.3 million, or $1.93 per diluted common share, which includes the establishment of a net deferred tax asset of $90.0 million related to the enactment of Bermuda’s corporate income tax. Operating net income of $135.4 million, or $1.15 per diluted common share.
• Underwriting income for the fourth quarter of 2023 was $94.4 million and a combined ratio of 81.4%, compared to underwriting income of $137.6 million and a combined ratio of 66.2% for the fourth quarter of 2022.
• Net favorable prior year loss reserve development for the fourth quarter of 2023 was $15.1 million compared to $3.9 million in the prior year period.
• Net investment income for the fourth quarter of 2023 was $38.7 million compared to $17.1 million in the prior year period.
• Operating ROE of 6.3%, or 25.2% annualized, in the quarter compared to 7.0%, or 28.0% annualized in the prior year period.
• Operating ROAE of 5.9%, or 23.6% annualized, in the quarter compared to 6.8%, or 27.2% annualized in the prior year period.
• Book value per diluted common share was $20.69 at December 31, 2023, an increase of 13.4%, compared to September 30, 2023.

Full Year 2023 Consolidated Results

• Net income available to common shareholders for the year ended December 31, 2023 was $2,132.5 million, or $18.65 per diluted common share, which includes a net gain on distribution of Fidelis MGU of $1,639.1 million and the establishment of a net deferred tax asset of $90.0 million related to the enactment of Bermuda’s corporate income tax. Operating net income was $398.9 million, or $3.49 per diluted common share.
• Underwriting income for the year ended December 31, 2023 was $327.3 million and a combined ratio of 82.1%, compared to $120.4 million and a combined ratio of 91.9% for the year ended December 31, 2022. The improvement was driven by premium growth in our Specialty segment together with significantly lower catastrophe and large losses.
• Net favorable prior year loss reserve development of $62.9 million compared to $22.1 million in the prior year.
• Net investment income of $119.5 million compared to $40.7 million in the prior year.
• Operating ROE and operating ROAE increased to 22.2% and 18.8%, respectively, in the year ended December 31, 2023, from 4.4% and 4.5%, respectively, in the year ended December 31, 2022, driven by significant increases in both underwriting income and investment income.
• Book value per diluted common share was $20.69 at December 31, 2023, an increase of 27.4% from the adjusted book value per diluted common share at the time of the Separation Transactions, which were completed on January 3, 2023, driven by net income and net unrealized gains reported in other comprehensive income.

The following table details key financial indicators in evaluating our performance for the three and twelve months ended December 31, 2023 and 2022:

		Three Months Ended December 31,										Twelve Months Ended December 31,
			2023				2022			Change			2023				2022			Change
		($ in millions, except for per share data)
Net income available to common shareholders		$	228.3			$	119.9			90%		$	2,132.5			$	52.6			3,954%
Earnings per diluted common share			1.93				0.60			222%			18.65				0.26			7,073%
Operating net income(1)			135.4				129.3			5%			398.9				89.5			346%
Operating EPS(1)			1.15				0.65			77%			3.49				0.45			676%
Gross premiums written			783.9				595.2			32%			3,579.0				3,018.1			19%
Net premiums earned			507.8				407.7			25%			1,832.6				1,500.5			22%
Catastrophe and large losses			75.5				(3.3	)		NM(2)			215.3				378.9			(43)%
Net favorable prior year reserve development			15.1				3.9			287%			62.9				22.1			185%
Net investment income			38.7				17.1			126%			119.5				40.7			194%
Combined ratio			81.4	%			66.2	%		15.2 pts			82.1	%			91.9	%		(9.8) pts
Operating ROE(1)			6.3	%			7.0	%		(0.7) pts			22.2	%			4.4	%		17.8 pts
Operating ROAE(1)			5.9	%			6.8	%		(0.9) pts			18.8	%			4.5	%		14.3 pts
(1) Operating net income, Operating EPS, Operating ROE and Operating ROAE are non-GAAP financial measures. See definition and reconciliation in “Non-GAAP Financial Measures.”
(2) NM - Not meaningful

Segment Results

Specialty Segment

The following table is a summary of our Specialty segment’s underwriting results:

		Three Months Ended December 31,												Twelve Months Ended December 31,
			2023				2022			Change					2023				2022			Change
		($ in millions)
Gross premiums written		$	423.0			$	371.7			$	51.3			$	2,241.3			$	1,616.2			$	625.1
Reinsurance premium ceded			(115.9	)			(116.3	)			0.4				(775.8	)			(558.8	)			(217.0	)
Net premiums written			307.1				255.4				51.7				1,465.5				1,057.4				408.1
Net premiums earned			335.3				251.4				83.9				1,203.3				849.4				353.9
Losses and loss adjustment expenses			(166.7	)			(98.8	)			(67.9	)			(583.1	)			(508.7	)			(74.4	)
Policy acquisition expenses			(61.9	)			(62.3	)			0.4				(289.1	)			(189.4	)			(99.7	)
Underwriting income		$	106.7			$	90.3			$	16.4			$	331.1			$	151.3			$	179.8
Loss ratio			49.7	%			39.3	%		10.4 pts					48.5	%			59.9	%		(11.4) pts
Policy acquisition expense ratio			18.5	%			24.8	%		(6.3) pts					24.0	%			22.3	%		1.7 pts
Underwriting ratio			68.2	%			64.1	%		4.1 pts					72.5	%			82.2	%		(9.7) pts

For the three months ended December 31, 2023, our underwriting ratio in the Specialty segment increased by 4.1 points from the prior year period, which was primarily driven by an increase in our loss ratio, as described below.

For the twelve months ended December 31, 2023, our underwriting ratio in the Specialty segment improved by 9.7 points from the prior year, which was primarily driven by a decrease in our loss ratio together with rate increases and improved pricing and terms and conditions.

For the three and twelve months ended December 31, 2023, net premiums earned increased primarily driven by an increase in net premiums written as a result of new business, strong renewals, and rate increases in the Property D&F, Marine and Aviation and Aerospace lines of business.

The following table is a summary of our Specialty segment’s losses and loss adjustment expenses:

		Three Months Ended December 31,												Twelve Months Ended December 31,
			2023				2022			Change					2023				2022			Change
		($ in millions)
Attritional losses		$	94.6			$	111.0			$	(16.4	)		$	381.9			$	300.9			$	81.0
Catastrophe and large losses			64.5				(9.5	)			74.0				160.9				218.8				(57.9	)
(Favorable)/adverse prior year development			7.6				(2.7	)			10.3				40.3				(11.0	)			51.3
Losses and loss adjustment expenses		$	166.7			$	98.8			$	67.9			$	583.1			$	508.7			$	74.4
Loss ratio - attritional losses			28.2	%			44.2	%		(16.0) pts					31.7	%			35.4	%		(3.7) pts
Loss ratio - catastrophe and large losses			19.2	%			(3.8	)%		23.0 pts					13.5	%			25.8	%		(12.3) pts
Loss ratio - prior accident years			2.3	%			(1.1	)%		3.4 pts					3.3	%			(1.3	)%		4.6 pts
Loss ratio			49.7	%			39.3	%		10.4 pts					48.5	%			59.9	%		(11.4) pts

For the three months ended December 31, 2023, our loss ratio in the Specialty segment increased by 10.4 points. For the twelve months ended December 31, 2023, our loss ratio in the Specialty segment improved by 11.4 points.

The catastrophe and large losses in the three months ended December 31, 2023 related primarily to losses in connection with the Viasat-3 satellite deployment failure, the Sudan Conflict and other loss events in our Property D&F line of business. This compared to prior year period catastrophe and large losses related to reversal of certain Hurricane Ian losses originally recorded in the three months ended September 30, 2022.

The catastrophe and large losses in the year ended December 31, 2023 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. This compared to the prior year catastrophe and large losses related to the Ukraine Conflict in our Aviation and Aerospace line of business, and Hurricane Ian in our Property D&F line of business.

The adverse prior year development for the three months ended December 31, 2023 primarily related to adverse development on Hurricane Ian in our Property D&F line of business.

The adverse prior year development for the year ended December 31, 2023 related primarily to increased estimates on two contracts in the Energy line of business, adverse development within the Property D&F and Aviation and Aerospace lines of business, and updated legal expense provisions in the reserve for the Ukraine Conflict.

Bespoke Segment

The following table is a summary of our Bespoke segment’s underwriting results:

		Three Months Ended December 31,												Twelve Months Ended December 31,
			2023				2022			Change					2023				2022			Change
		($ in millions)
Gross premiums written		$	353.2			$	222.7			$	130.5			$	720.4			$	795.7			$	(75.3	)
Reinsurance premium ceded			(127.1	)			(29.9	)			(97.2	)			(304.4	)			(229.1	)			(75.3	)
Net premiums written			226.1				192.8				33.3				416.0				566.6				(150.6	)
Net premiums earned			95.2				105.1				(9.9	)			375.6				384.4				(8.8	)
Losses and loss adjustment expenses			(19.5	)			(23.1	)			3.6				(92.0	)			(118.9	)			26.9
Policy acquisition expenses			(35.3	)			(40.5	)			5.2				(140.4	)			(135.3	)			(5.1	)
Underwriting income		$	40.4			$	41.5			$	(1.1	)		$	143.2			$	130.2			$	13.0
Loss ratio			20.5	%			22.0	%		(1.5) pts					24.5	%			30.9	%		(6.4) pts
Policy acquisition expense ratio			37.1	%			38.5	%		(1.4) pts					37.4	%			35.2	%		2.2 pts
Underwriting ratio			57.6	%			60.5	%		(2.9) pts					61.9	%			66.1	%		(4.2) pts

For the three and twelve months ended December 31, 2023, our underwriting ratio in the Bespoke segment improved by 2.9 points and 4.2 points, respectively, from the prior year period, which was primarily driven by a decrease in our loss ratio.

For the three months ended December 31, 2023, gross premiums written increased as a result of new business, predominantly structured credit deals, in addition to other contracts that had improved terms and conditions than in the three months ended September 30, 2023.

For the twelve months ended December 31, 2023, gross premiums written decreased as we were more selective on new business written. The Bespoke market is weighted towards opportunities which are non-recurring, and a number of factors impacted our view of risk in this segment in 2023, including geopolitical instability, inflation and rising interest rates.

The following table is a summary of our Bespoke segment’s losses and loss adjustment expenses:

		Three Months Ended December 31,												Twelve Months Ended December 31,
			2023				2022			Change					2023				2022			Change
		($ in millions)
Attritional losses		$	25.7			$	12.3			$	13.4			$	106.3			$	93.3			$	13.0
Large losses			(0.1	)			27.7				(27.8	)			20.4				54.5				(34.1	)
Favorable prior year development			(6.1	)			(16.9	)			10.8				(34.7	)			(28.9	)			(5.8	)
Losses and loss adjustment expenses		$	19.5			$	23.1			$	(3.6	)		$	92.0			$	118.9			$	(26.9	)
Loss ratio - attritional losses			27.0	%			11.7	%		15.3 pts					28.3	%			24.3	%		4.0 pts
Loss ratio - large losses			(0.1	)%			26.4	%		(26.5) pts					5.4	%			14.1	%		(8.7) pts
Loss ratio - prior accident years			(6.4	)%			(16.1	)%		9.7 pts					(9.2	)%			(7.5	)%		(1.7) pts
Loss ratio			20.5	%			22.0	%		(1.5) pts					24.5	%			30.9	%		(6.4) pts

For the three and twelve months ended December 31, 2023, our loss ratio in the Bespoke segment improved driven by lower large losses in the current year periods.

There were no large losses in the three months ended December 31, 2023, compared to a single large loss in our Other Bespoke line of business in the three months ended December 31, 2022.

The large losses in the twelve months ended December 31, 2023 related to two intellectual property losses in our Credit & Political Risk line of business. This compared to large losses in the twelve months ended December 31, 2022 related to the Ukraine Conflict in our Credit & Political Risk line of business and a single loss in our Other Bespoke line of business.

The favorable prior year development for the three and twelve months ended December 31, 2023 was driven by better than expected loss emergence across the majority of underlying lines of business.

Reinsurance Segment

The following table is a summary of our Reinsurance segment’s underwriting results:

		Three Months Ended December 31,												Twelve Months Ended December 31,
			2023				2022			Change					2023				2022			Change
		($ in millions)
Gross premiums written		$	7.7			$	0.8			$	6.9			$	617.3			$	606.2			$	11.1
Reinsurance premium ceded			8.3				(24.8	)			33.1				(362.2	)			(371.8	)			9.6
Net premiums written			16.0				(24.0	)			40.0				255.1				234.4				20.7
Net premiums earned			77.3				51.2				26.1				253.7				266.7				(13.0	)
Losses and loss adjustment expenses			(3.0	)			2.3				(5.3	)			(23.7	)			(202.6	)			178.9
Policy acquisition expenses			(23.4	)			(18.3	)			(5.1	)			(69.0	)			(59.7	)			(9.3	)
Underwriting income		$	50.9			$	35.2			$	15.7			$	161.0			$	4.4			$	156.6
Loss ratio			3.9	%			(4.5	)%		8.4 pts					9.3	%			76.0	%		(66.7) pts
Policy acquisition expense ratio			30.3	%			35.7	%		(5.4) pts					27.2	%			22.4	%		4.8 pts
Underwriting ratio			34.2	%			31.2	%		3.0 pts					36.5	%			98.4	%		(61.9) pts

For the three months ended December 31, 2023, our underwriting ratio in the Reinsurance segment increased by 3.0 points from the prior year period, which was primarily driven by an increase in our loss ratio.

For the twelve months ended December 31, 2023, our underwriting ratio in the Reinsurance segment improved by 61.9 points from the prior year, which was primarily driven by favorable prior year development and a reduction in catastrophe and large losses.

For the three months ended December 31, 2023 net premiums earned increased driven by the impact of our outwards reinsurance contracts.

For the twelve months ended December 31, 2023 net premiums earned decreased as 2022 benefited from the earnings of higher net premiums written in 2021.

The following table is a summary of our Reinsurance segment’s losses and loss adjustment expenses:

		Three Months Ended December 31,												Twelve Months Ended December 31,
			2023				2022			Change					2023				2022			Change
		($ in millions)
Attritional losses		$	8.5			$	3.5			$	5.0			$	58.2			$	79.2			$	(21.0	)
Catastrophe and large losses			11.1				(21.5	)			32.6				34.0				105.6				(71.6	)
(Favorable)/adverse prior year development			(16.6	)			15.7				(32.3	)			(68.5	)			17.8				(86.3	)
Losses and loss adjustment expenses		$	3.0			$	(2.3	)		$	5.3			$	23.7			$	202.6			$	(178.9	)
Loss ratio - attritional losses			11.0	%			6.8	%		4.2 pts					22.9	%			29.7	%		(6.8) pts
Loss ratio - catastrophe and large losses			14.4	%			(42.0	)%		56.4 pts					13.4	%			39.6	%		(26.2) pts
Loss ratio - prior accident years			(21.5	)%			30.7	%		(52.2) pts					(27.0	)%			6.7	%		(33.7) pts
Loss ratio			3.9	%			(4.5	)%		8.4 pts					9.3	%			76.0	%		(66.7) pts

The catastrophe and large losses in the Reinsurance segment for the three months ended December 31, 2023 related to severe convective storms in the U.S. in our Property Reinsurance line of business. This compared to the release of incurred but not reported losses in the prior year period related primarily to Hurricane Ian, partially offset by losses related to Australian floods.

The catastrophe losses in the Reinsurance segment for the twelve months December 31, 2023 related primarily to the Hawaii wildfires, severe convective storms in the U.S., and Cyclone Gabrielle in New Zealand, compared to prior year losses related to Hurricane Ian, Australian floods and European storms.

For the three months ended December 31, 2023, favorable prior year development related to loss reductions from various events and benign claim experience.

For the twelve months December 31, 2023, favorable prior year development related primarily to loss reductions from Hurricane Ian as well as favorable attritional experience driven by a benign claim experience on prior accident years.

Other Underwriting Expenses

We do not allocate Fidelis MGU commissions or general and administrative expenses by segment.

Fidelis MGU Commissions

For the three and twelve months ended December 31, 2023, our Fidelis MGU commissions were $77.9 million and $225.3 million, respectively, and are comprised of ceding and profit commissions as part of the Framework Agreement effective from January 1, 2023. Fidelis MGU manages origination, underwriting, underwriting administration, outwards reinsurance and claims handling under delegated authority agreements with the Group.

The following table summarizes Fidelis MGU commissions earned:

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2023			2022			2023			2022
		($ in millions)
Ceding commission expense		$	58.8		$	—		$	166.2		$	—
Profit commission expense			19.1			—			59.1			—
Total Fidelis MGU commissions		$	77.9		$	—		$	225.3		$	—

General and Administrative Expenses

For the three and twelve months ended December 31, 2023, our general and administrative expenses were $25.7 million and $82.7 million, respectively (2022: $29.4 million and $165.5 million). The decreases were primarily related to the reduced headcount and related costs following the consummation of the Separation Transactions.

Investment Results

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2023			2022			2023				2022
		($ in millions)
Net realized and unrealized investment gains/(losses)		$	7.3		$	3.8		$	4.9		$	(33.7	)
Net investment income			38.7			17.1			119.5			40.7
Net investment return		$	46.0		$	20.9		$	124.4		$	7.0

Net Realized and Unrealized Investment Gains/(Losses)

The net realized and unrealized investment gains in the three months ended December 31, 2023 resulted from a decrease in our allowance for credit losses and unrealized gains on other investments that are recorded at fair value. The net realized and unrealized investment gains for the year ended December 31, 2023 resulted from realized and unrealized gains on other investments, partially offset by net realized losses on sales of fixed maturity securities.

Net Investment Income

The increase in our net investment income in the three and twelve months ended December 31, 2023 was due to increases in interest rates during 2022 and 2023, where the short duration nature of our portfolio meant that we were reinvesting at higher rates.

Conference Call

Fidelis will host a teleconference to discuss its financial results on Friday, March 1, 2024 at 9:00 a.m Eastern time. The call may be accessed by dialing 1-888-886-7786 (U.S. callers), or 1-206-962-3782 (international callers), and entering the passcode 6281805 approximately 10 minutes in advance of the call. A live, listen-only webcast of the call will also be available via the Investor Relations section of the Company’s website at https://investors.fidelisinsurance.com/. A recording of the webcast will be available in the Investor Relations section of the Company’s website approximately two hours after the event concludes and will be archived on the site for one year.

About Fidelis

Fidelis Insurance Holdings Limited (NYSE: FIHL) is a global specialty insurer, leveraging strategic partnerships to offer innovative and tailored insurance solutions.

We have a highly diversified portfolio focused on three segments: Specialty, Bespoke, and Reinsurance, which we believe allows us to take advantage of the opportunities presented by evolving (re)insurance markets, proactively shift our business mix across market cycles, and produce superior underwriting returns.

Headquartered in Bermuda, with worldwide offices including Ireland and the UK, Fidelis Insurance operating companies have a financial strength rating of A- (Excellent) from AM Best, S&P and Fitch. For additional information about Fidelis Insurance, our people, and our products please visit our website at www.FidelisInsurance.com

Non-GAAP Financial Measures

This Press Release includes, and the related conference call will include, certain financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) including Operating net income, Operating EPS, Operating ROE and Operating ROAE, and therefore are non-U.S. GAAP financial measures. Reconciliations of such measures to the most comparable U.S. GAAP figures are included in the attached financial information in accordance with Regulation G.

RPI Measure

Renewal price index (RPI) is a measure that Fidelis has used to assess an approximate index of rate increases on a particular set of contracts, using the base of 100% for the rates for the relevant prior year. Although management considers RPI to be an appropriate statistical measure, it is not a financial measure that directly relates to the Fidelis consolidated financial results. Management’s calculation of RPI involves a degree of judgment in relation to comparability of contracts and the relative impacts of changes in price, exposure, retention levels, as well as any other changing terms and conditions on the RPI calculation. Consideration is given to potential renewals of a comparable nature so it does not reflect every contract in Fidelis’ portfolio. The future profitability and performance of a portfolio of contracts expressed within the RPI is dependent upon many factors besides the trends in premium rates, including policy terms, conditions and wording.

Safe Harbor Regarding Forward-Looking Statements

This press release (including the documents incorporated herein) contains, and our officers and representatives may from time to time make (including on our related conference call), "forward-looking statements" which include all statements that do not relate solely to historical or current facts and which may concern our strategy, plans, projections or intentions and are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "predict," "potential," "assumption," "future," "likely," "may," "should," "could," "will" and the negative of these and also similar terms and phrases. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are qualified by these cautionary statements, because they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions, but are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

Examples of forward-looking statements include, among others, statements we make in relation to: discussion relating to net income and net income per share; expected operating results, such as revenue growth and earnings; our expectations regarding our strategy and the performance of our business; information regarding our estimates for catastrophes and other loss events; our liquidity and capital resources; and expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings.

Our actual results in the future could differ materially from those anticipated in any forward-looking statements as a result of changes in assumptions, risks, uncertainties and other factors impacting us, many of which are outside our control, including: the ongoing trend of premium rate hardening and factors likely to drive continued rate hardening; expected growth across our portfolio; the availability of outwards reinsurance and capital resources as required; the development and pattern of earned and written premiums impacting embedded premium value; changes in accounting principles or the application thereof; the level of underwriting leverage; the level and timing of catastrophe and other losses and related reserves on the business we underwrite; the performance of our investment portfolios; our strategic relationship with Fidelis MGU; the maintenance of financial strength ratings; the impact of global geopolitical and economic uncertainties impacting the lines of business we write; the impact of tax reform and insurance regulation in the jurisdictions where our businesses are located; and those risks, uncertainties and other factors disclosed under the section titled ‘Risk Factors’ in Fidelis Insurance Holdings Limited’s final IPO prospectus filed pursuant to Rule 424(b)(4) (Registration No. 333-271270) with the SEC on June 30, 2023 (which such section is incorporated herein by reference), as well as subsequent filings with the SEC available electronically at www.sec.gov.

Any forward-looking statements, expectations, beliefs and projections made by us in this release and on our related conference call speak only as of the date on which they are made and are expressed in good faith and our management believes that there is reasonable basis for them, based only on information currently available to us. However, there can be no assurance that management’s expectations, beliefs, and projections will be achieved and actual results may vary materially from what is expressed or indicated by the forward-looking statements. Furthermore, our past performance, and that of our management team and of Fidelis MGU, should not be construed as a guarantee of future performance. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

FIDELIS INSURANCE HOLDINGS LIMITED Consolidated Balance Sheets At December 31, 2023 (Unaudited) and December 31, 2022 (Expressed in millions of U.S. dollars, except share and per share amounts)
		December 31, 2023				December 31, 2022
Assets
Fixed maturity securities, available-for-sale, at fair value (amortized cost: $3,271.4, 2022: $2,160.8 (net of allowances for credit losses of $1.3, 2022: $1.1))		$	3,244.9			$	2,050.9
Short-term investments, available-for-sale, at fair value (amortized cost: $49.0, 2022: $257.0 (net of allowances for credit losses of $nil, 2022: $nil))			49.0				257.0
Other investments, at fair value (amortized cost: $50.8, 2022: $126.3)			47.5				117.1
Total investments			3,341.4				2,425.0
Cash and cash equivalents			712.4				1,222.0
Restricted cash and cash equivalents			251.7				185.9
Accrued investment income			27.2				10.9
Premiums and other receivables (net of allowances for credit losses of $17.3, 2022: $8.8)			2,209.3				1,862.7
Amounts due from Fidelis MGU (net of allowances for credit losses of $nil, 2022: $nil)			173.3				—
Deferred reinsurance premiums			1,061.4				823.7
Reinsurance balances recoverable on paid losses (net of allowances for credit losses of $nil, 2022: $nil)			182.7				159.4
Reinsurance balances recoverable on reserves for losses and loss adjustment expenses (net of allowances for credit losses of $1.3, 2022: $1.0)			1,108.6				976.1
Deferred policy acquisition costs (includes deferred Fidelis MGU commissions $164.1, 2022: $nil)			786.6				515.8
Other assets			173.5				131.0
Total assets		$	10,028.1			$	8,312.5
Liabilities and shareholders' equity
Liabilities
Reserves for losses and loss adjustment expenses		$	2,448.9			$	2,045.2
Unearned premiums			3,149.5				2,618.6
Reinsurance balances payable			1,071.5				1,057.0
Amounts due to Fidelis MGU			334.5				—
Long term debt			448.2				447.5
Preference securities ($0.01 par, redemption price and liquidation preference $10,000)			58.4				58.4
Other liabilities			67.3				98.7
Total liabilities			7,578.3				6,325.4
Commitments and contingencies
Shareholders' equity
Common shares ($0.01 par, issued and outstanding: 117,914,754, 2022: 194,545,370)			1.2				1.9
Additional paid-in capital			2,039.0				2,075.2
Accumulated other comprehensive loss			(27.0	)			(100.8	)
Retained earnings			436.6				0.5
Total shareholders' equity attributable to common shareholders			2,449.8				1,976.8
Non-controlling interests			—				10.3
Total shareholders' equity including non-controlling interests			2,449.8				1,987.1
Total liabilities, non-controlling interests and shareholders' equity		$	10,028.1			$	8,312.5

FIDELIS INSURANCE HOLDINGS LIMITED Consolidated Statements of Income and Comprehensive Income (Unaudited) For the three and twelve months ended December 31, 2023 and December 31, 2022 (Expressed in millions of U.S. dollars except for share and per share amounts)
		Three Months Ended								Year Ended
		December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Revenues
Gross premiums written		$	783.9			$	595.2			$	3,579.0			$	3,018.1
Reinsurance premiums ceded			(234.7	)			(171.0	)			(1,442.4	)			(1,159.7	)
Net premiums written			549.2				424.2				2,136.6				1,858.4
Change in net unearned premiums			(41.4	)			(16.5	)			(304.0	)			(357.9	)
Net premiums earned			507.8				407.7				1,832.6				1,500.5
Net realized and unrealized investment gains/(losses)			7.3				3.8				4.9				(33.7	)
Net investment income			38.7				17.1				119.5				40.7
Other income/(loss)			(0.1	)			0.3				0.1				1.9
Total revenues before net gain on distribution of Fidelis MGU			553.7				428.9				1,957.1				1,509.4
Net gain on distribution of Fidelis MGU			—				—				1,639.1				—
Total revenues			553.7				428.9				3,596.2				1,509.4
Expenses
Losses and loss adjustment expenses			189.2				119.6				698.8				830.2
Policy acquisition expenses (includes Fidelis MGU commissions of $77.9 and $225.3 (2022: $nil and $nil))			198.5				121.1				723.8				384.4
General and administrative expenses			25.7				29.4				82.7				165.5
Corporate and other expenses			0.7				18.6				4.1				20.5
Net foreign exchange (gains)/losses			4.9				(2.7	)			4.1				(6.8	)
Financing costs			8.9				8.2				35.5				35.5
Total expenses			427.9				294.2				1,549.0				1,429.3
Income before income taxes			125.8				134.7				2,047.2				80.1
Income tax (expense)/benefit			102.5				(12.1	)			85.3				(17.8	)
Net income			228.3				122.6				2,132.5				62.3
Net income attributable to non-controlling interests			—				(2.7	)			—				(9.7	)
Net income available to common shareholders		$	228.3			$	119.9			$	2,132.5			$	52.6
Other comprehensive income/(loss)
Unrealized gains/(losses) on available-for-sale investments		$	66.9			$	14.5			$	82.4			$	(96.5	)
Income tax (expense)/benefit, all of which relates to unrealized gains/(losses) on available-for-sale investments			(8.3	)			0.7				(9.7	)			8.1
Currency translation adjustments			—				1.4				—				(1.1	)
Total other comprehensive income/(loss)			58.6				16.6				72.7				(89.5	)
Comprehensive income/(loss) attributable to common shareholders		$	286.9			$	136.5			$	2,205.2			$	(36.9	)
Per share data
Earnings per common share
Earnings per common share		$	1.94			$	0.62			$	18.65			$	0.27
Earnings per diluted common share		$	1.93			$	0.60			$	18.65			$	0.26
Weighted average common shares outstanding			117,914,754				194,465,927				114,313,971				194,290,180
Weighted average diluted common shares outstanding			118,249,860				199,412,376				114,324,683				199,323,854

FIDELIS INSURANCE HOLDINGS LIMITED Consolidated Segment Data (Unaudited) For the three and twelve months ended December 31, 2023 and December 31, 2022 (Expressed in millions of U.S. dollars)
		Three Months Ended December 31, 2023
		Specialty				Bespoke				Reinsurance				Other				Total
Gross premiums written		$	423.0			$	353.2			$	7.7			$	—			$	783.9
Net premiums written			307.1				226.1				16.0				—				549.2
Net premiums earned			335.3				95.2				77.3				—				507.8
Losses and loss adjustment expenses			(166.7	)			(19.5	)			(3.0	)			—				(189.2	)
Policy acquisition expenses			(61.9	)			(35.3	)			(23.4	)			(77.9	)			(198.5	)
General and administrative expenses			—				—				—				(25.7	)			(25.7	)
Underwriting income			106.7				40.4				50.9				(103.6	)			94.4
Net realized and unrealized investment gains																			7.3
Net investment income																			38.7
Other loss																			(0.1	)
Corporate and other expenses																			(0.7	)
Net foreign exchange losses																			(4.9	)
Financing costs																			(8.9	)
Income before income taxes																			125.8
Income tax expense																			102.5
Net income																			228.3
Net income attributable to non-controlling interests																			—
Net income available to common shareholders																		$	228.3
Losses and loss adjustment expenses incurred - current year			(159.1	)			(25.6	)			(19.6	)						$	(204.3	)
Losses and loss adjustment expenses incurred - prior accident years			(7.6	)			6.1				16.6								15.1
Losses and loss adjustment expenses incurred - total		$	(166.7	)		$	(19.5	)		$	(3.0	)						$	(189.2	)
Underwriting Ratios
Loss ratio - current year			47.4	%			26.9	%			25.4	%							40.3	%
Loss ratio - prior accident years			2.3	%			(6.4	%)			(21.5	%)							(3.0	%)
Loss ratio - total			49.7	%			20.5	%			3.9	%							37.3	%
Policy acquisition expense ratio			18.5	%			37.1	%			30.3	%							23.7	%
Underwriting ratio			68.2	%			57.6	%			34.2	%							61.0	%
Fidelis MGU commissions ratio																			15.3	%
General & administrative expense ratio																			5.1	%
Combined ratio																			81.4	%

		Three Months Ended December 31, 2022
		Specialty				Bespoke				Reinsurance				Other				Total
Gross premiums written		$	371.7			$	222.7			$	0.8			$	—			$	595.2
Net premiums written			255.4				192.8				(24.0	)			—				424.2
Net premiums earned			251.4				105.1				51.2				—				407.7
Losses and loss adjustment expenses			(98.8	)			(23.1	)			2.3				—				(119.6	)
Policy acquisition expenses			(62.3	)			(40.5	)			(18.3	)			—				(121.1	)
General and administrative expenses			—				—				—				(29.4	)			(29.4	)
Underwriting income			90.3				41.5				35.2				(29.4	)			137.6
Net realized and unrealized investment gains																			3.8
Net investment income																			17.1
Other income																			0.3
Corporate and other expenses																			(18.6	)
Net foreign exchange gains																			2.7
Financing costs																			(8.2	)
Income before income taxes																			134.7
Income tax expense																			(12.1	)
Net income																			122.6
Net income attributable to non-controlling interests																			(2.7	)
Net income available to common shareholders																		$	119.9
Losses and loss adjustment expenses incurred - current year			(101.5	)			(40.0	)			18.0							$	(123.5	)
Losses and loss adjustment expenses incurred - prior accident years			2.7				16.9				(15.7	)							3.9
Losses and loss adjustment expenses incurred - total		$	(98.8	)		$	(23.1	)		$	2.3							$	(119.6	)
Underwriting Ratios
Loss ratio - current year			40.4	%			38.1	%			(35.2	%)							30.3	%
Loss ratio - prior accident years			(1.1	%)			(16.1	%)			30.7	%							(1.0	%)
Loss ratio - total			39.3	%			22.0	%			(4.5	%)							29.3	%
Policy acquisition expense ratio			24.8	%			38.5	%			35.7	%							29.7	%
Underwriting ratio			64.1	%			60.5	%			31.2	%							59.0	%
General & administrative expense ratio																			7.2	%
Combined ratio																			66.2	%

		Year ended December 31, 2023
		Specialty				Bespoke				Reinsurance				Other				Total
Gross premiums written		$	2,241.3			$	720.4			$	617.3			$	—			$	3,579.0
Net premiums written			1,465.5				416.0				255.1				—				2,136.6
Net premiums earned			1,203.3				375.6				253.7				—				1,832.6
Losses and loss adjustment expenses			(583.1	)			(92.0	)			(23.7	)			—				(698.8	)
Policy acquisition expenses			(289.1	)			(140.4	)			(69.0	)			(225.3	)			(723.8	)
General and administrative expenses			—				—				—				(82.7	)			(82.7	)
Underwriting income			331.1				143.2				161.0				(308.0	)			327.3
Net realized and unrealized investment gains																			4.9
Net investment income																			119.5
Other income																			0.1
Net gain on distribution of Fidelis MGU																			1,639.1
Corporate and other expenses																			(4.1	)
Net foreign exchange losses																			(4.1	)
Financing costs																			(35.5	)
Income before income taxes																			2,047.2
Income tax expense																			85.3
Net income																			2,132.5
Net income attributable to non-controlling interests																			—
Net income available to common shareholders																		$	2,132.5
Losses and loss adjustment expenses incurred - current year			(542.8	)			(126.7	)			(92.2	)						$	(761.7	)
Losses and loss adjustment expenses incurred - prior accident years			(40.3	)			34.7				68.5								62.9
Losses and loss adjustment expenses incurred - total		$	(583.1	)		$	(92.0	)		$	(23.7	)						$	(698.8	)
Underwriting Ratios
Loss ratio - current year			45.2	%			33.7	%			36.3	%							41.5	%
Loss ratio - prior accident years			3.3	%			(9.2	%)			(27.0	%)							(3.4	%)
Loss ratio - total			48.5	%			24.5	%			9.3	%							38.1	%
Policy acquisition expense ratio			24.0	%			37.4	%			27.2	%							27.2	%
Underwriting ratio			72.5	%			61.9	%			36.5	%							65.3	%
Fidelis MGU commissions ratio																			12.3	%
General & administrative expense ratio																			4.5	%
☺Combined ratio																			82.1	%

		Year ended December 31, 2022
		Specialty				Bespoke				Reinsurance				Other				Total
Gross premiums written		$	1,616.2			$	795.7			$	606.2			$	—			$	3,018.1
Net premiums written			1,057.4				566.6				234.4				—				1,858.4
Net premiums earned			849.4				384.4				266.7				—				1,500.5
Losses and loss adjustment expenses			(508.7	)			(118.9	)			(202.6	)			—				(830.2	)
Policy acquisition expenses			(189.4	)			(135.3	)			(59.7	)			—				(384.4	)
General and administrative expenses			—				—				—				(165.5	)			(165.5	)
Underwriting income			151.3				130.2				4.4				(165.5	)			120.4
Net realized and unrealized investment losses																			(33.7	)
Net investment income																			40.7
Other income																			1.9
Corporate and other expenses																			(20.5	)
Net foreign exchange gains																			6.8
Financing costs																			(35.5	)
Income before income taxes																			80.1
Income tax expense																			(17.8	)
Net income																			62.3
Net income attributable to non-controlling interests																			(9.7	)
Net income available to common shareholders																		$	52.6
Losses and loss adjustment expenses incurred - current year			(519.7	)			(147.8	)			(184.8	)						$	(852.3	)
Losses and loss adjustment expenses incurred - prior accident years			11.0				28.9				(17.8	)							22.1
Losses and loss adjustment expenses incurred - total		$	(508.7	)		$	(118.9	)		$	(202.6	)						$	(830.2	)
Underwriting Ratios
Loss ratio - current year			61.2	%			38.4	%			69.3	%							56.8	%
Loss ratio - prior accident years			(1.3	%)			(7.5	%)			6.7	%							(1.5	%)
Loss ratio - total			59.9	%			30.9	%			76.0	%							55.3	%
Policy acquisition expense ratio			22.3	%			35.2	%			22.4	%							25.6	%
Underwriting ratio			82.2	%			66.1	%			98.4	%							80.9	%
General & administrative expense ratio																			11.0	%
Combined ratio																			91.9	%

FIDELIS INSURANCE HOLDINGS LIMITED

NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)

Operating net income: is a non-GAAP financial measure of our performance which does not consider the impact of certain non-recurring and other items that may not properly reflect the ordinary activities of our business, its performance or its future outlook. This measure is calculated as net income available to holders of common shares excluding net gain on distribution of Fidelis MGU, net realized and unrealized investment gains/(losses), net foreign exchange gains/(losses), and corporate and other expenses which include warrant costs, reorganization expenses, any non-recurring income and expenses, and the income tax (benefit)/expense on these items and the 2023 establishment of a net deferred tax asset related to the implementation of the Bermuda corporate income tax.

Return on average common equity (“ROAE”): represents net income divided by average common shareholders’ equity.

Operating return on average common equity (“Operating ROAE”): is a non-GAAP financial measure that represents a meaningful comparison between periods of our financial performance expressed as a percentage and is calculated as operating net income divided by adjusted average common shareholders’ equity.

Operating net income per diluted share (“Operating EPS”): is a non-GAAP financial measure that represents a valuable measure of profitability and enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the Group’s results in a manner similar to how management analyzes the Group’s underlying business performance. Operating EPS is calculated by dividing operating net income by the diluted weighted average common shares outstanding.

Operating return on opening common equity (“Operating ROE”): is a non-U.S. GAAP measure that represents a meaningful comparison between periods of our financial performance expressed as a percentage and is calculated as operating net income divided by adjusted opening common shareholders’ equity.

The table below sets out the calculation of the adjusted common shareholders’ equity, operating net income, ROAE, Operating ROE, Operating ROAE and Operating EPS, for the three and twelve months ended December 31, 2023 and 2022.

		Three Months Ended December 31,								Twelve Months Ended December 31,
			2023				2022				2023				2022
		($ in millions)
Average common shareholders' equity		$	2,305.0			$	1,907.3			$	2,213.3			$	1,995.4
Opening common shareholders' equity			2,160.1				1,837.8				1,976.8				2,013.9
Adjustments related to the Separation Transactions			—				—				(178.4	)			—
Adjusted opening common shareholders’ equity			2,160.1				1,837.8				1,798.4				2,013.9
Closing common shareholders' equity			2,449.8				1,976.8				2,449.8				1,976.8
Adjusted average common shareholders' equity			2,305.0				1,907.3				2,124.1				1,995.4
Net income available to common shareholders			228.3				119.9				2,132.5				52.6
Adjustment for net gain on distribution of Fidelis MGU			—				—				(1,639.1	)			—
Adjustment for net realized and unrealized investment (gains)/losses			(7.3	)			(3.8	)			(4.9	)			33.7
Adjustment for net foreign exchange (gains)/losses			4.9				(2.7	)			4.1				(6.8	)
Adjustment for corporate and other expenses			0.7				18.6				4.1				20.5
Income tax expense benefit (1)			(91.2	)			(2.7	)			(97.8	)			(10.5	)
Operating net income		$	135.4			$	129.3			$	398.9			$	89.5
ROAE			9.9	%			6.3	%			96.3	%			2.6	%
Operating ROE			6.3	%			7.0	%			22.2	%			4.4	%
Operating ROAE			5.9	%			6.8	%			18.8	%			4.5	%
Operating EPS		$	1.15			$	0.65			$	3.49			$	0.45
(1) Income tax benefit on adjustments to Net income available to common shareholders. The 2023 Income tax benefit includes the establishment of a net deferred tax asset of $90.0 million related to the implementation of the Bermuda corporate income tax.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229823745/en/

Investor Contact:

Fidelis Insurance Group

Miranda Hunter

(441) 279 2561

miranda.hunter@fidelisinsurance.com

Media Contacts:

Fidelis Insurance Group

James Dumelow

44 778 904 0954

James.Dumelow@fidelisinsurance.com

Kekst CNC

Fidelis@kekstcnc.com

Source: Fidelis Insurance Holdings Limited

FAQ

What were Fidelis Insurance Holdings Limited's gross premiums written for the fourth quarter of 2023?

Fidelis reported gross premiums written of $783.9 million for the fourth quarter of 2023, reflecting a growth of 31.7% from the same period in 2022.

What was Fidelis Insurance Holdings Limited's net income for the full year 2023?

Fidelis reported a net income of $2.1 billion for the full year 2023, translating to $18.65 per diluted common share.

What was the combined ratio for Fidelis Insurance Holdings Limited in the fourth quarter of 2023?

Fidelis achieved a combined ratio of 81.4% in the fourth quarter of 2023, indicating improved underwriting performance.

What was the result of Fidelis Insurance Holdings Limited's IPO on the NYSE?

Fidelis completed its IPO on the NYSE on July 3, 2023, raising $89.4 million in net proceeds through the issuance of 7,142,857 common shares at $14.00 per share.

What were Fidelis Insurance Holdings Limited's Operating ROE and ROAE for the full year 2023?

Fidelis reported Operating ROE of 22.2% and Operating ROAE of 18.8% for the full year 2023, reflecting significant increases in both metrics.