Burrows optimistic about 2025 rates
Re/insurance rates are likely to remain consistent in 2025 as the markets have reached “the top of the mountain” with “plenty of oxygen” for rates to remain strong for the foreseeable future.
That’s the view of Fidelis Insurance Group chief executive officer Dan Burrows, who said in an interview with Bermuda:Re+ILS that the current strong pricing environment differed from previous hard markets which saw influxes of capital that expanded supply.
Burrows, whose company has just come off a strong third quarter with a 14.7% earnings increase and a combined ratio for the first nine months of the year of 88.6%, said it had taken four to five years for the markets to drive up prices but capital had grown as profits were retained, despite money being returned to investors.
“In terms of a favourable pricing environment, we're right at the top of the mountain,” he said. “There's plenty of oxygen up here for us to stay for quite a long time. So we think we'll be operating a very favourable market for the foreseeable future.”
Burrows, who became CEO in 2022 when Fidelis Insurance Group and The Fidelis Partnership bifurcated and steered the company through an initial public offering last year, added the company would have a better sense of pricing in the next few months.
“The improvement in the markets has been four or five years in the making, and prices have moved dramatically,” he said. “You can call it a hard market but it’s very different to other hard markets, where you saw a Class of 2005 or a Class of 2001 and capital flowing in quite visibly. That hasn't happened in this market.
“Profits that have been retained from last year are now being used to deliver them back to shareholders through share buybacks,” he added. “We've seen a lot of that this quarter so that discipline will remain for quite a long time.”
Burrows said the return of capital to shareholders was well timed as investors had been patient during several years of bad results.
“Companies are saying, let's take advantage of those good returns and make the investors happy, because, let's be honest, they haven't had a great experience. There have been a lot of poor custodians of capital.”
To date, Fidelis has returned $141 million to shareholders through buybacks and dividends, which along with strong results has driven its share price to $19.65 compared to $14 when it floated in 2023.
Burrows noted that the company’s combined ratio, the key measure of underwriting profitability, was also “really compelling”. “It’s something we are really proud of.”
Looking ahead, Burrows said he was optimistic about property direct and facultative and reinsurance as drivers in 2025, as well as growth in the BRICS countries where he said there were opportunities.
“In some countries there's an insurance gap, but there are new pools of exposure and risk that we need to be at the front of,” he said.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
