Pelagos Insurance Capital Limited

Hi, it is now the start time. Would you like me to start your conference now or would you still like to wait for a few more minutes? Let's wait one minute and then we'll go. Okay, thank you. Hello, are we good to start now? Yes, please go ahead. Thank you so much. Starting your conference now in 3, 2, 1. Good morning, ladies and gentlemen, and welcome to the Fidelis Insurance Group's first quarter 2025 earnings conference call. As a reminder, this call is being recorded for replay purposes. Following the conclusion of former remarks, the management will host a questioning answer session and instructions will be given 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 Fidelis Insurance Group's first quarter 2025 earnings conference call. With me today are Dan Burrows, our CEO, Alan DeClaire, our CFO, and Johnny Strickle, our Group Managing Director. 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 and emerging information developing over time. These risks and uncertainties are described in our first quarter earnings press release and our most recent annual report on Form 20F filed with the SEC, as available on our website at fidelisinsurance.com. 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 be achieved. Consequently, actual results may differ materially from those expressed or implied. For more information, including on the risks and other factors that may affect future performance, investors should review the safe harbour regarding forward-looking statements included in our first quarter earnings press release, available on our website, fidelisinsurance.com, as well as those periodic reports that are filed with us with the SEC from 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 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, fidelisinsurance.com. With that, I'll turn the call over to Dan.

Thanks, Miranda. Good morning, everyone, and thank you for joining us on our call today. I want to begin by reiterating our commitment to executing on our strategy of pursuing profitable underwriting opportunities and strategic capital management. In a period that has seen the highest first quarter industry catastrophe losses in over a decade and global political uncertainty causing volatility in the financial markets, we have remained focused on providing solutions for our clients across the globe and actively managing our capital. We believe our strong capital position, leading and diversified portfolio of short tail risk with no casualty exposure and our measured approach to investments leave us well positioned to navigate the current environment and capitalise on market conditions that continue to generate good underwriting margin. For the first quarter, we recorded top line growth of 14%. driven by strong retention levels and new business opportunities across the portfolio. This included new partnerships, as well as reinstatement premiums in our reinsurance segment. Our combined ratio for the quarter was 115.6%, reflecting the impacts of the California wildfires. Specifically, the impact from the wildfires to our first quarter results was $167 million, which is tracking to the lower end of our expected range. This is net of expected recoveries, reinstatement premiums and tax. The wildfires were yet another reminder of the impacts of climate change and the increasing frequency and severity of secondary perils. We write a leading book of property insurance and reinsurance, and given the relative size of this portfolio, we believe our performance demonstrates the quality of our underlying portfolio and the importance of active exposure management, including the strategic use of outwards reinsurance. Across our portfolio more broadly, we continue to see an attractive trading environment supported by strong margins across our lines of business. After years of compound rate increases, we are still in one of the best underwriting environments I've seen in my career. While we have seen increasing competition in some lines, our portfolio is well diversified across over 100 lines of business, and our lead positioning, long-term relationships, distribution channels, and live sign leverage afford us access to the most compelling risks at preferential rates, terms, and conditions. As a short tail writer, our differentiated position is a key advantage at all stages of the cycle. And as a leader in a verticalized market, we are less impacted by the effects of rating pressure. Within insurance, the first quarter is particularly significant for our marine portfolio. We saw continued growth year on year. This again was predominantly driven by new construction business. where we saw capacity-driven demand, as well as the continuation of our strategy to leverage our capacity across the subclasses to optimise margin. Off the back of a strong fourth quarter, asset-backed finance and portfolio credit continued to record notable growth as we recognised revenue from our partnership with Euclid Mortgage and executed two new deals with a repeat client in our structured credit portfolio. As a reminder, A large proportion of our structured credit business comes from one-off transactions, which do not renew in the same way as traditional insurance risks. Binding business with repeat clients in this space demonstrates the value we are able to bring to clients in structuring capital efficient solutions. In direct property, a core part of our portfolio, we saw strong retention levels in the first quarter and a continued flow of new business. We have a market leading direct and facultative account, which after years of compound rate increases, continues to produce one of the best margins in our business. Overall, growth in insurance was partially offset by a reduction in our aviation and aerospace premiums year on year, which was largely driven by the timing of a line slip renewal, which moved from Q1 and closed in the second quarter. Given rating levels and the current loss environments, we continue to take a disciplined approach to aviation, focusing on targeted deployment of capacity in areas of higher margin. We will not write business that does not meet our underwriting hurdles. Turning to reinsurance, we recorded strong growth driven by new business as well as reinstatement premiums associated with the California wildfire losses. Overall, we were pleased with the results of January 1st renewal season where we were able to uphold prior year improvements to rates, terms and conditions, as well as add new business in both our international and US portfolios, as we continue to optimise and refine the portfolio within our view of risk. As we remain focused on deploying our capital to the right risk, we continue to explore new opportunities in highly accretive and profitable business segments to maximise our returns and access new risk and distribution. In addition to our cornerstone relationship with the Fidelis Partnership, we have now onboarded our first third-party partners and recognised revenue from these in the first quarter. While not material to the overall portfolio, We believe these partnerships offer the opportunity to augment our existing book at compelling returns and are part of the strategic evolution of our business. The bar for new partnerships remains high and must meet our internal underwriting hurdles. Turning to capital management, we remain committed to optimising shareholder returns and our strong balance sheet provides us with the flexibility to support profitable growth across our underwriting portfolio and to execute accruesive capital management actions. We strategically purchased outwards reinsurance protection across the quarter, enabling us to capitalise on favourable buying conditions and enhance protection across our portfolio. In addition, given our current share price, we continue to believe share repurchases are an accretive use of excess capital. Year to date, we have repurchased $41.5 million of common shares and an average cost per share of $15.63. Alan will touch on this in more detail shortly. I would also like to provide an update on the Russia-Ukraine aviation litigation. Since our last call, we have continued to take action to de-risk our overall exposure by judiciously settling certain claims. Following continued settlement activity in the quarter, we have now settled or are in various stages of settlement discussions for approximately 80% of our total exposure related to the lesser policy claims in litigation. Of the remainder, the majority of the exposure is related to the English trial, for which we continue to hold reserves based on a probabilistic model of potential court outcomes. As of this morning, the judgment for the English trial is still pending. Depending on the judgment, we would expect an impact to prior development. In the event of a favourable judgment, this would result in positive prior year development and would be reflected in the results following final resolution of the legal process, including any appeals. Conversely, should we face an adverse judgment, we anticipate that this would result in a net adverse prior year development impact of up to $150 million, which would immediately be recognised in our results. Once we have received the results of the English trial, we will have resolved approximately 95% of the exposure in respect to lesser policy claims in litigation, putting our exposure to this event essentially behind us. Looking ahead, our underlying portfolio continues to perform well, and we remain focused on capitalizing on attractive opportunities to drive growth and optimize margin. Before turning over to Alan, I wanted to reflect on an important milestone for the company. In the first quarter, we announced the appointment of Jonny Strickle as Group Managing Director. Many of you will know Jonny, who has been an integral member of our team since he joined Fidelis in 2020, contributing to all aspects of the business. Jonny's new role is a recognition of the value he brings to Fidelis. He will provide strategic, analytical and commercial leadership at group level, in addition to continuing to have full oversight for the company's actuarial functions. We have an exceptional leadership team and a strong pipeline of talent throughout the organization. Johnny's promotion reflects the high caliber of our people, all of whom drive our company's success. With that, I will pass over to Alan, who will provide more color on our first quarter financials.