Fidelis partners with mortgage insurance MGA

Fidelis Insurance Group has formed a strategic partnership with a managing general agency specialising in mortgage insurance.

The partnership with Euclid Mortgage Insurance Services is the first MGA partnership Bermuda-based Fidelis has made outside of its agreement with The Fidelis Partnership (TFP) from whom its bifurcated two years ago. 

Dan Burrows, chief executive officer of Fidelis Insurance Group (FIG), said in an interview that  the company planned to make more partnerships with MGAs but was very selective in whom it chose to do business with, as demonstrated by the fact this was the first deal it had made in two years. 

Fidelis will provide reinsurance capacity to Euclid Mortgage, along with other reinsurers. He said Euclid’s CEO, Joe Monaghan, was a mortgage reinsurance “guru”.  

The company said the partnership closely aligned with FIG's  strategy of identifying new opportunities to provide long-term capacity to best-in-class underwriters. 

Burrows said in a statement: “This partnership is an exciting opportunity to work with an underwriting team that has decades of experience and is well known and respected in the US mortgage (re)insurance market. 

 “While The Fidelis Partnership remains our cornerstone partner, this opportunity to support a new partner with proven expertise in an attractive line of business is a natural evolution as we continue our journey to diversify and strengthen our portfolio. Given the strong credentials of the Euclid Mortgage team, we anticipate this partnership will contribute to our overarching goal of sustained growth and profitability through the cycle.”

In an interview with Bermuda:Re+ILS, Burrows said the partnership with Euclid was driven by the quality of the MGA’s management team, a number of whom had worked with FIG before. 

He said Euclid chief executive officer Joe Monaghan, with whom Burrows had worked at Aon, was “the guru in the mortgage reinsurance market”. 

“They've got great access to a select portfolio of mortgage insurers,” he said. “It's been a great line of business. So we're very pleased to onboard that.”

Monaghan said in a statement: “We are thrilled to embark on this strategic partnership with Fidelis Insurance Group. We have enormous respect for the Fidelis Insurance Group team, who have demonstrated true leadership and innovation. Together, we will bring similar leadership, innovation, and a long-term commitment to the mortgage reinsurance market.”

 The partnership, which starts on January 1, is estimated to produce about $35 million of gross premiums written in 2025.

Burrows said FIG expected to make more distribution agreements in the future, but had strict criteria for partnerships. 

He said the company already had some exposure to mortgage insurance through TFP and this deal complemented it. 

“This is the first partner we've onboarded outside of the partnership and the first third party,” he told Bermuda:Re+ILS. “It is small because we are quite cautious, but mortgage has been a very profitable line of business for a number of years. “

Burrows said it targeted MGAs that had combined ratios of up to around 85%, which cut some potential partners out. 

“That's a high benchmark in terms of quality that they have to meet, so when we're looking for the characteristics of a good partner, those metrics are very important. Culture is important, longevity is important.”

Burrows said the partnership with TFP would always be the foundation of the business, and it had taken two years to find the first third party partner who met all of the criteria. 

“It’s not like we just opened up the door,” he said. “We have worked through a lot of opportunities that just didn't hit the metrics. Euclid is the first one that did.”

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