Bermuda-based insurer and reinsurer Fidelis Insurance Holdings Limited has reported a net loss of $42.5 million and a higher combined ratio of 115.6% for the first quarter of 2025, as catastrophe losses, driven by the California wildfires, dented the underwriting performance, notably within its reinsurance business.
Group-wide, Fidelis fell to an underwriting loss of $94.5 million for Q1 2025 compared with income of $69.2 million a year earlier, reflected in the deterioration of the combined ratio from 85.8% in Q1 2024 to the aforementioned 115.6% this quarter.
Catastrophe and large losses increased by more than 220% year on year to $333.3 million, driven by the costly wildfires in California in January, which pushed the firm’s reinsurance business to an underwriting loss for the quarter of $76.4 million, compared with a gain of $55.7 million last year.
Catastrophe and large losses in the reinsurance business increased by $166 million to $167 million from $0.9 million, partially offset by net favourable prior year development of $33.3 million, resulting in total losses and loss adjustment expense of $147.8 million.
As a result, the reinsurance segment’s loss ratio rose by 195.7 percentage points year on year to 162.2% in Q1 2025, which combined with a higher expense ratio of 21.6%, pushed the reinsurance underwriting ratio up by 204.1 percentage points to 183.8% in Q1 2025.
Catastrophe and large losses, again driven by the California wildfires, also increased in the firm’s insurance business, to $166.3 million from $102.1 million, although the segment did still produce an underwriting profit of $82.3 million in Q1 2025, down on the prior year’s $113.8 million. Favourable prior year development fell by $35.2 million year on year to $7.5 million, as total losses and loss adjustment expenses increased to $281.4 million from $197.8 million.
The insurance segment loss ratio rose by 10.2 percentage points to 55% and the expense ratio reduced slightly to 29%, leading to an underwriting ratio of 84% for Q1 2025 compared with 74.3% in Q1 2024.
While Fidelis’ underwriting performance in the opening quarter of the year suffered on the back of the elevated catastrophe experience, gross premiums written (GPW) across the group increased by 14% year on year to $1.72 billion, and net premiums earned (NPE) increased by 24% year on year to $603 million, with growth in both the insurance and reinsurance businesses.
Fidelis’ reinsurance GPW rose $128 million year on year to $455.9 million, driven primarily by reinstatement premiums related to the California wildfires, and growth from new business. Net premiums written (NPW) increased by $119 million year on year to $217.5 million, and NPE increased by $45 million to $91.1 million, driven by the acceleration of earnings on contracts with exposure to the California wildfires.
In the insurance business, GPW increased by $80 million year on year to $1.3 billion, NPW by $129 million to $808.9 million, and NPE increased by $70 million to $511.9 million. Fidelis attributes the growth in GPW to new business opportunities in the Asset Backed Finance & Portfolio Credit line of business, driven by a newly onboarded partnership, along with growth from new business opportunities in our Marine line of business.
The Fidelis Partnership, which manages origination, underwriting, underwriting administration, outwards reinsurance and claims handling under delegated authority agreements with the group, earned total commissions of $78.4 million in Q1 2025, up slightly on Q1 2024’s $76.7 million.
Lastly, on the asset side of the balance sheet, Fidelis has reported a rise in net investment income of $49.5 million for Q1 2025, an increase on the prior year’s $41 million.
All in all, Fidelis has reported a net loss of $42.5 million and an operating loss of $45.3 million for the first quarter of 2025, compared with income of $81.2 million and income of $87.3 million, respectively, in the first quarter of 2024.
“During the first quarter, we capitalized on new business opportunities across the portfolio and delivered 14% top-line growth. The strength of our balance sheet also enabled us to repurchase $41.5 million of common shares year-to-date, which at our current valuation, is highly accretive to our book value,” said Dan Burrows, Group Chief Executive Officer of Fidelis.
“While our combined ratio and ROAE were impacted by the highest first quarter catastrophe losses in over a decade, the impact of the California wildfires is tracking to the lower end of our expected range. 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.
“As we look ahead, we continue to see an attractive trading environment. With our leading position, strong balance sheet, and proactive approach to capital management, we believe we are well-positioned to capitalize on profitable underwriting opportunities, optimize margins, and create long-term value for our shareholders,” he added.
