Pelagos Insurance Capital Limited

Good morning, ladies and gentlemen, and welcome to the Fidelis Insurance Holdings second quarter 2024 earnings conference call. As a reminder, this call is being recorded for replay purposes. Following the conclusion of formal remarks, the management team will host a question and answer session and instructions will be provided at that time. With that, I will now turn the call over to Miranda Hunter, head of investor relations. Ms. Hunter, please go ahead.

Good morning, and welcome to the Fidelis Insurance Group's second quarter 2024 earnings conference call. With me today are Dan Burrows, our CEO, Alan DeClaire, our CFO, and Johnny Strickle, our Chief Actuarial Officer. Before we begin, I'd like to remind everyone that statements made during the call, including the question and answer section, may include forward-looking statements. These statements are based upon management's current assessments and assumptions. and are subject to a number of risks and uncertainties. These risks and uncertainties are described in our most recent annual report on Form 20F filed with the SEC. Although we believe that the expectations reflected in forward-looking statements have a reasonable basis when made, we can give no assurances that these expectations will prove to be achieved. Consequently, actual results may differ materially from those expressed for Form 5. For more information, including on the risks and other factors that may affect future performance, investors should also review periodic reports that are filed by us with the SEC for time to time. Management will also make reference to certain non-GAAP measures of financial performance. The reconciliation to U.S. GAAP for each non-GAAP financial measure and our definition of RPI, which is our Renewal Pricing Index, can be found in our current report on Form 6K furnished to the SEC yesterday. which contains our earnings press release and is available on our website at adellasinsurance.com. With that, I'll turn the call over to Dan.

Thank you, Miranda. Good morning, everyone, and thank you for joining us. I will make a few comments before handing it over to Alan and Johnny to go through the quarter in more detail. The second quarter marks the one-year anniversary of our listing as a public company. We are pleased to report a solid quarter, during which we have successfully deployed capital into attractive underwriting opportunities and returned excess capital to our shareholders. Our position as a market leader focused on short-tailed specialty lines enables us to remain focused on delivering attractive growth and driving value creation for our shareholders. In underwriting, we continue to see attractive opportunities driving excellent top-line growth. and we remain on track to achieve our 2024 full year premium targets broadly in line with the growth we saw last year. Mature hard market conditions persist with a strong rating environment across the portfolio. The market remains verticalized and as a leader, we are able to achieve preferential rates, terms and conditions. We are committed to disciplined underwriting and as we have spoken about before, One advantage of our business model is the ability to quickly respond to changing market conditions and we remain focused on deploying our capital where we see the most attractive risk reward opportunities in underwriting and broader capital management. We increased gross premiums written by 24.7% in the second quarter with double digit growth across all three of our segments. positive pricing persisted across our portfolio with an overall RPI of 112% in the quarter. Following several years of compound rate increases, rate acceleration is beginning to slow in some areas, but market conditions remain at the best levels we have seen in recent history. In our specialty segment, we continue to see opportunities for targeted growth at attractive returns with RPIs of 114%. Looking at our key lines of business, property directs and facultative continue to be a driver of growth, with gross written premiums up 37.4%, driven by high retention of existing clients and new business. Rate and terms and conditions remain strong, with property directs and facultative RPIs of 117%. In marine, rates generally remain steady, with RPIs of 104%. In our aviation and aerospace business, premiums were down as compared to prior year, predominantly driven by aviation, where in general aviation, certain deals did not meet our underwriting criteria and rating hurdles. Aviation and aerospace remains a core line of business for us, and we will continue to evaluate opportunities while maintaining underwriting discipline. We recorded strong growth in our bespoke segment in the second quarter. where we were able to convert a number of significant structured credit deals from our pipeline of opportunities. The structured credit market picked up in the quarter as banks and asset managers came into the market looking to utilize insurance for capital relief and credit enhancement. Turning to our reinsurance segment, on the back of market corrections over the past few years, pricing levels remain healthy. Leveraging our lead positioning, we were once again able to achieve positive rate increases and attractive terms and conditions across our portfolio with an RPI of 107%. Growth in our North American property book was primarily driven by new business opportunities from nationwide accounts. In Florida, based on our view of the rating environment, we maintained our cautious stance and continued to take a targeted approach, focusing on higher tier clients. Within our international property book, growth was driven by the April 1st Japanese renewals as we expanded our relationships. Pricing remains attractive in this market following several years of rate increases on the back of the typhoon impacted years of 2018 and 2019. Across our entire underwriting portfolio, our combined ratio for the quarter was 92.7%. This is above prior quarters, primarily driven by a higher level of catastrophe and large losses in our specialty segment and losses on intellectual property insurance within our bespoke segment. Intellectual property contributed 8.2 points to our overall combined ratio for the quarter. In response to the performance of the intellectual property business, we have ceased underwriting this product. This highlights the alignment in our approach to underwriting decisions with the Fidelis Partnership. as we act quickly to preserve underwriting integrity. Active capital management remains a cornerstone of our strategy, and we are committed to reinvesting into the business, while also opportunistically returning excess capital to shareholders through dividends and share repurchases. We believe buying back shares at the current price is a compelling use of our excess capital. We have completed our existing $50 million share repurchase programme, and as announced last night, our board of directors has authorized a new share repurchase program of $200 million. Alan will expand on this in his remarks. Finally, I want to discuss something more personal. I'm currently undergoing medical treatment as a result of a recent accident. I expect to complete this treatment soon and I look forward to catching up with you in the near future. Alan and Johnny will now continue with our prepared marks and then answer your questions.