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 ...

Financial Data and Key Metrics Changes - The company reported an operating net income of $137 million for 2024, with a combined ratio of 99.7% [10][26] - The diluted book value per share increased by 5.3% to $21.79 from the end of 2023 [27] - Net investment income rose by 59% to $191 million compared to 2023, driven by an increase in investable assets and higher yields [17][40] Business Line Data and Key Metrics Changes - Gross premiums written increased by 23% to $4.4 billion, with direct property gross premiums growing by 30% [14][15] - The insurance segment saw a 19% increase in gross premiums written in Q4, while the reinsurance segment grew to $32 million despite being seasonally low [28][29] - The combined ratio for Q4 was reported at 128%, with net adverse prior year development of $270 million primarily in the aviation and aerospace line [31][32] Market Data and Key Metrics Changes - The company experienced significant catastrophe losses due to California wildfires, estimating losses between $160 million to $190 million net of recoveries [20][21] - The overall market conditions remain favorable, with an RPI of 111% for the full year and 106% for Q4 [14][118] Company Strategy and Development Direction - The company is focused on maintaining underwriting discipline and capital management while pursuing strategic growth opportunities [8][48] - A new partnership with UK Mortgage is expected to generate approximately $35 million in gross premiums written in 2025 [55] - The company aims for a mid- to high-80s combined ratio and a target operating return on average equity of 13% to 15% through the cycle [59] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating evolving market conditions and highlighted the potential for improved pricing following recent catastrophic events [48][128] - The company anticipates a 10% growth in gross premiums written across its portfolio in 2025, supported by strong relationships and new distribution channels [58][59] Other Important Information - The company returned $152 million of excess capital to shareholders through dividends and share buybacks [18][27] - A new 15% corporate income tax in Bermuda is expected to impact future financials starting in 2025 [42] Q&A Session Summary Question: Lessons learned from recent wildfires - Management noted that the recent wildfires were significant but within their overall capital budget and expectations for such events [65][66] Question: Impact of performance fees and carryforward mechanisms - Management confirmed that there is no deficit to carry forward into future years due to a combined ratio of 99.7% for 2024 [72] Question: Anticipation of subrogation recoveries from wildfires - Management indicated it is too early to provide details on potential subrogation recoveries [77] Question: Net investment income fluctuations - Management explained that net investment income was consistent with Q3, and the flat investable assets in Q4 contributed to the results [79] Question: Competitive environment and pricing dynamics - Management highlighted that the market is benefiting from better rates and terms, with an optimistic outlook for growth in direct property and reinsurance segments [118][123] Question: Aviation and aerospace reserves and litigation outcomes - Management discussed the ongoing litigation and the measures taken to de-risk exposure, emphasizing the strength of the balance sheet [100][101]

Core Insights - Fidelis Insurance Holdings (FIHL) reported revenue of $685.9 million for Q4 2024, a year-over-year increase of 23.9% [1] - The company's EPS for the same period was -$1.05, compared to $1.15 a year ago [1] - Revenue fell short of the Zacks Consensus Estimate of $694.51 million, resulting in a surprise of -1.24% [1] - The EPS surprise was +2.78%, with the consensus estimate being -$1.08 [1] Financial Metrics - The combined ratio was reported at 128%, significantly higher than the estimated 109% [4] - The loss ratio stood at 80.9%, compared to the estimated 63.7% [4] - Net premiums earned were $634.50 million, slightly below the average estimate of $639.50 million, but represented a year-over-year increase of 25% [4] - Net investment income was reported at $51.40 million, lower than the average estimate of $55.01 million, with a year-over-year change of +32.8% [4] Stock Performance - Shares of Fidelis Insurance have returned -13.7% over the past month, while the Zacks S&P 500 composite changed by -1.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Fidelis Insurance Holdings reported a quarterly loss of $1.05 per share, slightly better than the Zacks Consensus Estimate of a loss of $1.08, but down from earnings of $1.15 per share a year ago, indicating a challenging financial performance [1][2] Financial Performance - The company posted revenues of $685.9 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.24%, and showing an increase from $553.7 million year-over-year [2] - Over the last four quarters, Fidelis Insurance has surpassed consensus EPS estimates two times, but has not beaten consensus revenue estimates during the same period [2] Stock Performance - Shares of Fidelis Insurance have declined approximately 20% since the beginning of the year, contrasting with a 1.7% gain in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $691.9 million, and for the current fiscal year, it is $3.24 on revenues of $2.99 billion [7] Industry Outlook - The Zacks Industry Rank for Insurance - Multi line is currently in the bottom 43% of over 250 Zacks industries, suggesting that the industry is underperforming compared to the top half [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Fidelis Insurance's stock performance [5][6]

Core Insights - Fidelis Insurance (NYSE: FIHL) is an emerging insurer focusing on tailored insurance and reinsurance solutions, showcasing impressive growth and profitability despite being a small-cap company [1] - The company has reported strong underwriting results and is continuing to expand across various business segments [1] Company Overview - Fidelis Insurance specializes in providing customized insurance and reinsurance solutions [1] - The company has demonstrated significant growth and profitability in its operations [1] Financial Performance - The company has reported strong underwriting results, indicating effective risk management and operational efficiency [1] - Continued expansion in various business areas suggests a positive outlook for future growth [1]

Core Insights - Momentum investing focuses on following a stock's recent price trends, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps investors identify stocks with strong momentum, addressing the challenges of defining momentum in stocks [2] Company Overview: Fidelis Insurance Holdings (FIHL) - FIHL currently holds a Momentum Style Score of A, indicating strong momentum characteristics [3] - The company has a Zacks Rank of 1 (Strong Buy), which is associated with a historical outperformance in the market [4] Performance Metrics - Over the past week, FIHL shares increased by 5.82%, significantly outperforming the Zacks Insurance - Multi line industry, which rose by 0.44% [7] - In a longer timeframe, FIHL's monthly price change is 16.85%, compared to the industry's 0.72% [7] - Over the last quarter, FIHL shares rose by 11.7%, and over the past year, they increased by 67.18%, while the S&P 500 only moved 6.16% and 32.62%, respectively [8] Trading Volume - The average 20-day trading volume for FIHL is 447,908 shares, which serves as a bullish indicator when combined with rising stock prices [9] Earnings Outlook - In the past two months, two earnings estimates for FIHL have been revised upwards, increasing the consensus estimate from $2.94 to $3.15 [11] - For the next fiscal year, two estimates have also moved upwards, with no downward revisions [11] Conclusion - Given the strong performance metrics and positive earnings outlook, FIHL is positioned as a promising investment opportunity with a Momentum Score of A [12]

Core Viewpoint - Fidelis Insurance Holdings Limited (FIHL) is highlighted as a strong investment opportunity with a Zacks Rank 1 and a significant increase in earnings estimates [1] Summary by Category Company Overview - Fidelis Insurance Holdings Limited is an insurance holding company with a current year earnings estimate that has increased by 7.1% over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 6.25, which is significantly lower than the S&P's P/E of 23.86 [1] Investment Characteristics - The company possesses a Value Score of A, indicating strong value characteristics for investors [1]

Core Viewpoint - Fidelis Insurance Holdings (FIHL) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][2]. Earnings Estimates - Analysts are optimistic about the earnings prospects of Fidelis Insurance, leading to higher estimates that are expected to positively impact the stock price [2]. - The consensus earnings estimate for the current quarter is $0.96 per share, reflecting a decrease of 16.52% compared to the previous year [4]. - For the full year, the expected earnings are $3.15 per share, which is a decline of 9.74% from the prior year, but recent revisions show a positive trend with an 8.26% increase in consensus estimates [5]. Zacks Rank - Fidelis Insurance has achieved a Zacks Rank 1 (Strong Buy), indicating strong potential for outperformance based on earnings estimate revisions [6]. - The Zacks Rank system has a proven track record, with Zacks 1 Ranked stocks averaging an annual return of +25% since 2008 [3]. Stock Performance - The stock has increased by 10.8% over the past four weeks due to favorable estimate revisions, suggesting further upside potential [7].