Fidelis profit drops in first quarter
Improved investment results failed to offset declines in underwriting profit driven by a $50 million loss from the Baltimore Bridge collapse for Fidelis Investment Holdings in the first quarter of 2024.
The Bermuda-based specialty re/insurer recorded a net profit of $81.2 million in the three months to March 31 compared to $93.5 million in the same period in 2023 excluding the one-time $1.64 billion sale of The Fidelis Partnership last year which gave the company net income of $1.73 billion.
The company recorded an underwriting profit of $69.2 million compared to $80.1 million in 2023, although gross written premiums increased to $1.51 billion from $1.25 billion in 2023. The combined ratio worsened to 85.8% from 79.1%.
“2024 is off to a very strong start as we build on our momentum from 2023 and continue capitalizing on attractive market opportunities," said Dan Burrows, group chief executive officer. "In line with our expectations, we delivered strong underwriting performance including 21.6% growth in gross premiums written and a combined ratio of 85.8%. Additionally, we achieved an Annualized Operating ROAE of 14.0% and grew our book value per diluted common share to $21.22.
"As we look ahead to the rest of the year, we will continue to leverage our scale, deep relationships, and lead positioning to further grow our business. Our fundamentals are excellent, we have a strong pipeline of opportunities, and we are leaning in across attractive lines where we expect to generate increased underwriting profitability. Coupled with our proactive and disciplined approach to investment and capital management, we believe we are well positioned to continue delivering compelling returns through the cycle and creating value for our shareholders.”
The company said operating net income dropped from $93.7 million to $87.3 million and the company was impacted by a large increase in catastrophe and large losses, which rose to $103 million from $22 million, of which $50 million was attributed to the Baltimore Bridge collapse.
The increase in large losses was partly offset by favourable prior year development of $67 million compared to $2.1 million and a doubling of net investment income from $20.4 million to $41 million.
By segment, Fidelis' specialty segment saw gross written premiums jump to $1.03 billion from $834 billion and underwriting profit rose to $77.9 million from $59.2 million. The result was affected by the $50 million loss from the bridge collapse plus smaller losses in aviation, marine and property, offset by a $34.4 million favourable prior year development. '
The underwriting ratio held steady at 77.8%.
The bespoke segment's gross written premiums inched up to $153 million from $150 million and a rise in losses saw underwriting income drop to $36.2 million from $44.8 million. The underwriting ratio worsened to 59.7% from 50.9%. It too benefited from a $8 million favourable prior year development.
The reinsurance segment saw gross premiums written jump from $260 million to $327 million while a substantial drop in losses and favourable prior year development drove an underwriting profit of $55.4 million compared to $17.4 million in 2023.
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