FIDELIS INSURANCE HOLDINGS LIMITED Unaudited Consolidated Financial Statements For the Three Months Ended March 31, 2025 and 2024 1 FIDELIS INSURANCE HOLDINGS LIMITED TABLE OF CONTENTS | Page | | | --- | --- | | Financial Statements | | | Consolidated Balance Sheets at March 31, 2025 (Unaudited) and December 31, 2024 | 3 | | Consolidated Statements of Income and Comprehensive Income (Unaudited) for the three months ended March 31, 2025 and | 4 | | 2024 | | | Consolidated Statements of Changes in Shareholder ...

Financial Data and Key Metrics Changes - The company recorded top line growth of 14% for Q1 2025, with gross premiums written amounting to $1.7 billion, compared to the same quarter last year [21][9] - The combined ratio for the quarter was 115.6%, impacted significantly by catastrophe losses, particularly from California wildfires, which accounted for $333 million in losses [23][24] - Net premiums written increased by 32% year-over-year, while net premiums earned rose by 24% [22][23] Business Line Data and Key Metrics Changes - In the insurance segment, gross premiums written increased by 7% to $1.3 billion, driven by new business and asset-backed finance [22] - The reinsurance segment saw a 39% increase in gross premiums written to $456 million, largely due to new business and reinstatement premiums related to wildfire losses [22] - The attritional loss ratio improved to 22.7% from 30% in the prior year, indicating better performance in the overall portfolio [23] Market Data and Key Metrics Changes - The company noted a favorable trading environment with strong margins across various lines of business, despite increasing competition in some areas [10][11] - The marine portfolio continued to grow year-on-year, primarily driven by new construction business [11] - The aviation and aerospace premiums saw a reduction year-on-year due to the timing of a line slip renewal [13] Company Strategy and Development Direction - The company remains committed to pursuing profitable underwriting opportunities and strategic capital management, focusing on a diversified portfolio with no casualty exposure [7][8] - Management emphasized the importance of active exposure management and the strategic use of outward reinsurance to navigate current market conditions [10][14] - The company is exploring new opportunities in highly accretive and profitable business segments to maximize returns [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to achieve approximately 10% growth in gross premiums written for the year, citing a strong trading environment [39][45] - The company is actively monitoring global economic conditions and adjusting its underwriting strategy accordingly, particularly in response to inflation and political risks [31][33] - Management highlighted the importance of maintaining a strong balance sheet to support profitable growth and capital management initiatives [30][41] Other Important Information - The company repurchased $41.5 million of common shares at an average cost of $15.63 per share year-to-date [17][29] - The company has settled or is in various stages of settlement discussions for approximately 80% of its total exposure related to the Russia-Ukraine aviation litigation [18][19] - The average rating of fixed income securities remains high at A+, with a book yield of 5% [27] Q&A Session Summary Question: Growth opportunities in the second half of the year - Management acknowledged a timing headwind in the aviation line and expressed confidence in achieving 10% growth for the year despite the challenges [43][45] Question: Drivers of favorable reserve movement - Management noted strong performance in the attritional book and reserve releases from prior catastrophe events as key drivers of the favorable prior year development [47][48] Question: Explanation for stock trading at a discount to book value - Management agreed on the undervaluation and emphasized the need to continue performing well to build investor confidence [52][54] Question: Impact of UK aviation litigation on share repurchases - Management indicated that they would continue to repurchase shares opportunistically, depending on market conditions and share prices [56][90] Question: Competitive environment in property insurance - Management highlighted the ability to implement pricing adjustments in real-time and noted strong demand in the market, allowing for continued growth [97][100]

Financial Data and Key Metrics Changes - The company recorded top line growth of 14% for Q1 2025, with gross premiums written amounting to $1.7 billion, compared to the same quarter last year [18][7] - The combined ratio for the quarter was 115.6%, impacted significantly by catastrophe losses, particularly from California wildfires, which accounted for $333 million in losses [20][21] - Net investment income increased to $50 million, up from $41 million in the prior year, reflecting a higher yield on cash and fixed income portfolios [25] Business Line Data and Key Metrics Changes - In the insurance segment, gross premiums written increased by 7% to $1.3 billion, driven by new business and asset-backed finance [19] - The reinsurance segment saw a 39% increase in gross premiums written to $456 million, largely due to new business and reinstatement premiums related to wildfire losses [19] - The attritional loss ratio improved to 22.7% from 30% in the prior year, indicating better performance in the overall portfolio [20] Market Data and Key Metrics Changes - The company noted a favorable trading environment with strong margins across various lines of business, despite increasing competition in some areas [9][8] - The marine portfolio continued to grow year-on-year, primarily driven by new construction business [10] - The aviation and aerospace premiums saw a reduction year-on-year due to the timing of a line slip renewal [11] Company Strategy and Development Direction - The company remains committed to pursuing profitable underwriting opportunities and strategic capital management, focusing on a diversified portfolio with no casualty exposure [6] - The management emphasized the importance of active exposure management and the strategic use of outward reinsurance to navigate current market conditions [8][12] - The company is exploring new opportunities in highly accretive business segments to maximize returns and access new risks [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to achieve approximately 10% growth in gross premiums written for the year, citing a strong trading environment [36][42] - The company is actively monitoring global economic conditions and adjusting its underwriting strategy accordingly, particularly in response to inflation and political risks [30][29] - Management highlighted the importance of maintaining strong relationships with clients and brokers to access business at preferential terms [34] Other Important Information - The company repurchased $41.5 million of common shares at an average cost of $15.63 per share year-to-date, indicating a commitment to returning capital to shareholders [14][27] - The company has settled or is in various stages of settlement discussions for approximately 80% of its total exposure related to the Russia-Ukraine aviation litigation [15][90] Q&A Session Summary Question: What are the growth opportunities in the second half of the year? - Management acknowledged a timing headwind in the aviation line and expressed confidence in achieving 10% growth for the year, citing a diversified portfolio [40][42] Question: Can you discuss the drivers behind the favorable reserve movement? - Management noted that the favorable prior year development of $41 million was driven by strong performance in the attritional book and reserve releases from prior catastrophe events [44][45] Question: Why is the stock trading at a discount to book value? - Management agreed on the undervaluation and emphasized the need to continue performing well to build investor confidence [48][50] Question: What is the impact of the pending UK aviation litigation on share repurchases? - Management indicated that the strong capital position allows for both profitable underwriting and share repurchases, with plans to continue buying back shares if prices remain attractive [82][85] Question: How is the company addressing the competitive environment in property insurance? - Management highlighted the ability to implement pricing adjustments in real-time and the strong demand from the admitted market, allowing for continued growth [92][94]

Core Insights - Fidelis Insurance Holdings (FIHL) reported revenue of $652.5 million for Q1 2025, reflecting a year-over-year increase of 25.5% [1] - The company's EPS was -$0.41, a decline from $0.74 in the same quarter last year, with an EPS surprise of +4.65% against the consensus estimate of -$0.43 [1] - The revenue fell short of the Zacks Consensus Estimate by -0.55% [1] Financial Metrics - The combined ratio for Fidelis Insurance was reported at 115.6%, better than the estimated 116.9% [4] - The loss ratio was 71.2%, slightly worse than the estimated 70.2% [4] - Net premiums earned were $603 million, closely matching the average estimate of $603.48 million, with a year-over-year increase of 23.6% [4] - Net investment income was reported at $49.5 million, below the estimated $52.61 million, but showed a year-over-year increase of 20.7% [4] Stock Performance - Over the past month, shares of Fidelis Insurance have returned +6.3%, compared to a +9.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Core Insights - Fidelis Insurance Holdings reported a quarterly loss of $0.41 per share, which was better than the Zacks Consensus Estimate of a loss of $0.43, and a significant decline from earnings of $0.74 per share a year ago, indicating a 155.4% year-over-year decrease in earnings [1] - The company posted revenues of $652.5 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.55%, but showing a 25.5% increase from year-ago revenues of $520 million [2] - Fidelis Insurance shares have underperformed the market, losing about 4.7% since the beginning of the year compared to the S&P 500's gain of 0.1% [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.77 on revenues of $653.93 million, and for the current fiscal year, it is $2.35 on revenues of $2.9 billion [7] - The estimate revisions trend for Fidelis Insurance is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Insurance - Multi line industry, to which Fidelis Insurance belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Core Insights - Fidelis Insurance Holdings (FIHL) is expected to report a quarterly loss of $0.43 per share, reflecting a year-over-year decline of 158.1% [1] - Revenue is anticipated to reach $656.08 million, showing an increase of 26.2% compared to the same quarter last year [1] Earnings Projections - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a collective reevaluation by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong link between earnings estimate trends and short-term stock price movements [3] Revenue Breakdown - Analysts project 'Revenues- Net premiums earned' to be $603.48 million, representing a 23.7% increase from the prior-year quarter [5] - 'Revenues- Net investment income' is estimated to reach $52.61 million, indicating a 28.3% increase from the prior-year quarter [5] Key Metrics - The 'Combined Ratio' is forecasted at 116.9%, compared to 85.8% in the same quarter of the previous year [6] - The 'Loss Ratio' is expected to be 70.2%, up from 37.4% in the same quarter last year [6] Stock Performance - Fidelis Insurance shares have increased by 8.4% in the past month, while the Zacks S&P 500 composite has risen by 13.7% [6] - With a Zacks Rank 3 (Hold), FIHL is expected to closely follow overall market performance in the near term [6]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Fidelis Insurance Holdings (FIHL) despite an increase in revenues when it reports its results for the quarter ended March 2025 [1][3]. Earnings Expectations - The consensus EPS estimate for the upcoming report is a loss of $0.43 per share, reflecting a significant year-over-year decline of 158.1% [3]. - Revenues are projected to reach $656.08 million, which represents a 26.2% increase compared to the same quarter last year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 2.53%, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for Fidelis Insurance is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -16.28%, suggesting a bearish outlook from analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, with positive readings being more reliable [7][8]. - Stocks with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 have historically shown a nearly 70% chance of delivering a positive surprise [8]. Historical Performance - In the last reported quarter, Fidelis Insurance was expected to post a loss of $1.08 per share but delivered a loss of $1.05, resulting in a positive surprise of 2.78% [12]. - Over the past four quarters, the company has beaten consensus EPS estimates twice [13]. Conclusion - Fidelis Insurance does not currently appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding this stock ahead of its earnings release [16].

Group 1 - Recent wildfires in Los Angeles in January 2025 have positively impacted property and casualty insurers, leading to a surge in their performance [1] - Mercury General was significantly affected by the wildfires, indicating potential vulnerabilities within the company [1] Group 2 - Henriot Capital emphasizes a quant-driven investment approach, focusing on data-driven decisions without human bias [1] - The investment strategy of Henriot Capital is characterized by a motto of "invest first, investigate later," which prioritizes model recommendations over individual analysis [1]

Underwriting and Risk Management - The Group's underwriting strategy focuses on low-frequency, high-severity losses, which have increased in frequency and unpredictability due to changing climate conditions [24]. - The Group's operating results are significantly affected by the frequency and severity of catastrophic events, leading to potential volatility in quarterly and annual financial results [28]. - The Group's loss reserves may be inadequate, which could result in a significant reduction in net income if actual losses exceed estimates [35]. - Catastrophe modeling tools may be under-developed or inaccurate, leading to worse-than-expected losses and adversely affecting the Group's financial condition [30]. - The Group's exposure to natural and non-natural catastrophic events could lead to significant variance in financial results, impacting cash flows and overall financial condition [28]. - The Group's risk management methods, including reinsurance and catastrophe bonds, may not be effective in mitigating losses from catastrophic events [38]. - The Group's claims may exceed its loss reserves, significantly affecting its business and financial condition [36]. - The unpredictability of climate change may increase the frequency and severity of claims from catastrophic events in the future [29]. - The Group's underwriting results can vary widely across the industry, making it difficult to forecast short-term trends or returns [25]. - The Group's financial performance is expected to fluctuate in line with the (re)insurance industry's cyclical patterns, experiencing both "soft" and "hard" market conditions [44]. - The Group believes the (re)insurance industry has been in a "hard" market cycle for several years, but future premium rates are uncertain [45]. Economic and Geopolitical Factors - The Insurance segment's business is vulnerable to global economic and geopolitical uncertainty, with a general drop in underwriting deal flow observed in 2020 due to the COVID-19 pandemic [46]. - The aviation line of business has faced significant strain due to the ongoing Ukraine Conflict, impacting leased aircraft and creating uncertainty regarding potential losses [48]. - The ongoing Ukraine Conflict has created uncertainty and potential volatility in the (re)insurance industry, impacting claims and financial conditions [89][94]. - The company has identified increased claims and potential losses in specific business lines due to the Ukraine Conflict, particularly in the Aviation and Aerospace sector [92]. - Coverage disputes, particularly related to the ongoing Ukraine Conflict, have led to increased uncertainty and potential losses [73]. - The company faces litigation risks related to claims from aircraft lessors due to the Ukraine Conflict, which could lead to significant financial implications [95][96]. Financial and Operational Risks - The Group's ability to write premium as expected may be inhibited by various factors, potentially leading to lower profitability [54]. - Competition and consolidation in the (re)insurance industry may adversely impact the Group, with increased competition from traditional and non-traditional players [52]. - A downgrade in the Group's financial strength ratings by credit rating agencies could negatively affect business volume and quality [56]. - The Group's strategy includes outwards reinsurance, which is subject to credit risk and may not always be available or adequate [61]. - The Group's participation in the catastrophe bond market provides collateralized retrocessional coverage, but future coverage may not conform to past purchases [61]. - Changes in laws related to certain perils could significantly impact the Group's ability to process claims and respond to events [60]. - The Group identified two material weaknesses in internal control over financial reporting, impacting the accuracy of data input and reinsurance balances [81]. - As of December 31, 2024, the material weaknesses were considered remediated through strengthened finance and operations teams [82]. - The Group's ability to write business may be affected by the availability of reinsurance, potentially requiring more capital to be held [64]. - Cyber threats pose an evolving risk that could materially affect the Group's business and financial condition [68]. - The Group's financial condition could be adversely affected by failures to maintain effective internal controls, potentially leading to restatements of financial statements [83]. - The Group's capital reserves may be significantly impacted by the reduction in reinsurance availability, necessitating a reevaluation of business written [64]. Compliance and Regulatory Risks - As a recently listed public company, the company incurs significant legal, accounting, and compliance costs that were not present as a private entity, impacting overall financial performance [84]. - The company is required to comply with Sarbanes-Oxley Act Section 404, which necessitates ongoing internal control assessments and could lead to adverse market reactions if material weaknesses are identified [85][86]. - The Group's ability to distribute dividends may be restricted by regulatory changes, impacting liquidity for holding companies [162]. - Increased regulatory scrutiny of outsourcing agreements could lead to higher operational costs and potential disruptions in business operations [173]. - The Group may face material adverse effects on operations due to potential regulatory compliance requirements from insurance regulators in the U.S. and other jurisdictions [183]. - Changes in regulatory capital requirements in the U.S., U.K., E.U., or Bermuda could impact the capital reserves that the Group must maintain [185]. - The Group is subject to evolving cybersecurity, privacy, and data protection laws, which may increase operational costs and compliance risks [188]. - The Group's failure to comply with economic and trade sanctions laws could result in civil and criminal penalties, adversely affecting its business and financial condition [189]. Investment and Market Risks - The Group's investment portfolio is significantly affected by market conditions, including geopolitical uncertainties such as the Ukraine Conflict and the Middle East situation, which may lead to declines in asset valuations [144]. - The Group's financial results are subject to various investment risks, including interest rate fluctuations, which could result in unrealized losses on fixed maturity securities if interest rates rise [149]. - The concentration of the Group's business with a small number of key brokers poses a risk of reduced premium income, potentially leading to a material adverse effect on the Group's financial condition [141]. - The Group's investment portfolio includes higher-risk assets, which may be subject to significant valuation differences and could limit liquidity during times of market stress [154]. - Currency fluctuations can lead to exchange losses, impacting the Group's financial results, as a portion of its business is conducted in currencies other than the U.S. dollar [158]. - The Group's investment guidelines focus on fixed maturity and cash products, but may change based on market conditions and events [143]. - The Group's exposure to credit risk is heightened due to reliance on brokers and intermediaries for premium collections, which could lead to liabilities if payments are not made [140]. - The Group's ability to manage its investment portfolio effectively is critical, as operational risks could adversely affect financial performance [146]. - Changes in central bank policies, particularly regarding interest rates, remain a key uncertainty that could impact the Group's business and investment performance [147]. - The determination of expected credit losses on investments is subjective and could materially affect the Group's operating results and financial position [155]. - The Group's investment portfolio is at risk due to financial market volatility, which could affect liquidity and capital market access [161]. - Inflation and high interest rates have increased the risk of defaults and could adversely impact the value of the Group's investments [161]. - The Group's operations are susceptible to inflation, which may lead to underpricing of risks insured and reinsured [164]. - Unanticipated higher inflation could necessitate an increase in loss reserves, adversely affecting net income and financial condition [165]. Strategic Partnerships and Dependencies - The Group relies on The Fidelis Partnership for critical services, and any failure in this relationship could disrupt operations and adversely affect financial results [97][102]. - The Framework Agreement with The Fidelis Partnership has a rolling initial term of 10 years, with automatic renewals for the first three years, which could impact long-term strategic planning [98]. - The company must ensure compliance with reporting obligations from The Fidelis Partnership to avoid severe impacts on its own reporting as a listed entity [99]. - The Group retains oversight over The Fidelis Partnership's execution of the Outsourced TFP Underwriting Plan, which could materially affect the Group's financial condition if monitoring efforts are inadequate [103]. - The Fidelis Partnership's senior management is critical to the success of the Outsourced TFP Underwriting Plan, and their potential departure could negatively impact the Group's operations [104]. - The Group's agreements with The Fidelis Partnership may not be as favorable as those negotiated with an unaffiliated third party, potentially limiting the Group's recourse in case of breaches [106]. - The Fidelis Partnership owns approximately 9.9% of the Group's common shares, leading to potential conflicts of interest that may not align with the best interests of the Group's shareholders [107]. - The Group's reliance on policyholders' evaluations of exposures may expose it to reinsurance disputes and regulatory actions, significantly affecting its financial results [108]. Operational and Technological Risks - Operational risks, including IT failures and outsourcing arrangements, are inherent in the Group's business and could lead to significant losses [112]. - The Group's business is heavily dependent on third-party information technology systems, which are critical for its operations and could face disruptions [113]. - Cybersecurity threats have increased, and while the Group has implemented safeguards, there is no guarantee against future attacks that could impact its operations [120]. - The Group's financial data and proprietary models are processed through its information technology platform, which is essential for its business operations [121]. - The Group has experienced past cybersecurity incidents that were not deemed material, but future incidents could negatively impact its business significantly [124]. - The Group's reliance on third-party service providers for critical IT systems poses a risk, as their failure could lead to significant business interruptions [137]. - The Group's ability to attract and retain key employees is crucial for implementing its long-term business strategy, especially in a competitive labor market [127]. - The Group anticipates increased use of artificial intelligence technologies, which could enhance operational efficiencies but also introduce new risks [126]. - The Group's business strategy could be adversely affected by Bermuda employment restrictions, impacting its ability to hire necessary personnel [130]. - The Group's financial condition may be negatively impacted if it is required to post higher collateral amounts due to regulatory changes [134].

Basis of Presentation December 31, 2024 Investor Presentation Cautionary Note Regarding Forward-Looking Statements This presentation, the related press release, posts on our website and LinkedIn and the related discussion and analysis relating to our financial results for the three and twelve months ended December 31, 2024 contain, and our officers and representatives may from time to time make (including on our related earnings conference call), "forward-looking statements" which include all statements tha ...