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DATE

Thursday, May 14, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Daniel Burrows
  • Chief Financial Officer — Allan Carl Decleir
  • Chief Underwriting Officer — Jonathan Strickle

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RISKS

  • Management said, "aviation, and we cut our premium as detailed in the last call by about 50% in the last year. We have not seen any upside there," indicating ongoing weakness in this line.
  • Regarding cyber risk, management stated, "where we cannot get the cap to be a level that we find acceptable, then we would walk away from it. And that is exactly what is happened," suggesting withdrawal from less controlled segments.
  • "recognized increased loss Estimates Related To The Baltimore Bridge collapse." during the quarter, evidencing exposure to large complex claims despite favorable overall development.

TAKEAWAYS

  • Combined ratio -- 86.6%, an improvement of 29 points compared to the prior-year period.
  • Operating net income -- $88 million, or $0.94 per diluted common share for the quarter.
  • Annualized operating ROAE -- 15.2% for the quarter.
  • Book value per diluted share -- Grew to $26.22, a 7.2% increase including dividends for the quarter.
  • Gross premiums written -- $1.8 billion, up 7% year over year, with insurance segment premiums up 13% and reinsurance segment premiums up 7% excluding California wildfire reinstatement impacts.
  • Catastrophe and large losses -- $72 million, or 12.7 points of the combined ratio, down from $333 million, or 55.3 points, in the prior-year quarter, mainly due to lower California wildfire losses.
  • Attritional loss ratio -- 27.2 points of the combined ratio, stable with recent periods.
  • Net investment income -- $44 million, with 92% of the portfolio in cash and fixed maturities, an average yield of 4.4%, average fixed maturity rating of A+, and 2.7 years duration.
  • Share repurchases -- 11.5 million shares repurchased for $219 million at $19 per share, including repurchase of all remaining CVC sponsor shares; $185 million remains authorized for buybacks.
  • Dividend -- Declared a $0.15 quarterly dividend payable in June.
  • Debt redemption -- $125 million in junior subordinated notes redeemed, resulting in a pro forma debt-to-capital ratio of 24.2% at March 31.
  • Outwards reinsurance -- Achieved approximately 20% price reductions, used to purchase more aggregate excess of loss cover and lower retention levels.
  • Public float -- Now 65% of shares, after the strategic sponsor repurchase.
  • Effective tax rate -- -4.8% for the quarter due to a one-time UK tax law benefit; underlying rate remains near 16% excluding this item.
  • Prior year development -- $3 million net favorable in the quarter, with impact from Baltimore Bridge included and sub-30% loss ratio in D&F despite three large losses.
  • Reinsurance segment loss ratio -- Three-year average annual loss ratio in the segment remains below 20%.
  • Outlook for net premiums earned -- Second-quarter insurance net earned premiums expected similar to the first quarter; reinsurance net earned premiums expected at $65 million to $75 million.
  • Market strategy -- Management said, "We do not anticipate any further secondary follow on offerings with our remaining original and long term PE sponsors in the near term."
  • Growth outlook -- The company continues to expect mid-single-digit top-line growth for the full year across the portfolio.
  • New underwriting partners -- Partnerships such as Bamboo Insurance and Euclid Mortgage contributed meaningfully to growth, with scalable platforms for further expansion.
  • Risk strategy -- The company is shifting to aggregate structures for natural catastrophe protections and cutting quota share sessions on higher-margin business.

SUMMARY

Fidelis Insurance Holdings Limited (FIHL +14.35%) reported a record quarterly increase in book value per diluted share, driven by sharply improved underwriting results and significant capital returns. Expansion with new underwriting partners in both insurance and reinsurance channels enabled broad-based premium growth, while disciplined risk selection and outwards reinsurance purchases enhanced margin resilience across volatile markets. The redemption of legacy sponsor shares substantially increased the public float and eliminated near-term overhang from secondary offerings, aligning the capital base for future flexibility.

  • Management confirmed, "We continue to believe that our current market price of stock is undervalued," with no near-term plans for further sponsor share sales.
  • The quarter featured a one-time UK tax benefit, driving the reported negative effective tax rate but not expected to recur in future periods.
  • Further premium growth is anticipated from scalable partner platforms such as Oak Global and Euclid Mortgage, supporting expansion in property cat and US mortgage lines.
  • The company continues to focus on lean operations, maintaining low expense ratios and leveraging third-party partnerships to drive margin without increasing headcount.

INDUSTRY GLOSSARY

  • Combined ratio: The sum of loss and expense ratios in insurance, measuring underwriting profitability; a ratio under 100% indicates underwriting profit.
  • Attritional loss ratio: The proportion of losses from expected, non-catastrophic events to premiums earned.
  • ROAE: Return on average equity; measures annualized profitability relative to average shareholders' equity.
  • Net premiums earned: The portion of gross premiums attributable to the expired part of policies, recognizing earned income within the accounting period.
  • Quota share: A proportional reinsurance arrangement where the reinsurer assumes an agreed percentage of each insurance policy written.
  • Retrocession: Reinsurance purchased by reinsurers to transfer part of their risk portfolios to other companies.
  • Outwards reinsurance: Insurance purchased by an insurer to limit exposure to large losses by ceding risk to third parties.
  • Excess of loss cover: A type of reinsurance where the reinsurer only pays losses exceeding a set threshold, protecting insurers against high-severity losses.
  • Public float: The percentage of shares freely tradable by the public, excluding insider and sponsor holdings.
  • D&F: Direct and facultative insurance, typically written on individual risk (rather than treaty) basis; commonly used in property markets.

Full Conference Call Transcript

Daniel Burrows: Thank you, Miranda. Good morning, everyone. And thank you for joining us today. I am pleased to welcome you to our first earnings call as Pelagos Insurance Capital. The Pelagos rebrand marks an exciting milestone and a deliberate step in our evolution. Our new name is a stronger, clearer reflection of who we are. An expert capital allocator accelerating our resilience high performing, diversified portfolio by bringing together strategic capital and underwriting expertise through our expanding community of specialist partners. Our strong first quarter performance builds on our momentum from last year, I want to highlight 3 key areas that both underscore our progress and position us well for continued success. First, we once again delivered excellent results.

Demonstrating the strength and flexibility of our capital allocator model. We achieved a combined ratio of 86.6%. generated annualized operating ROAE, of 15.2% and grew book value per diluted share to $26.22. Including dividends, an increase of 7.2% in the quarter, This represents our best ever quarter of value creation for our shareholders. Second, our growth this quarter highlights the unique advantages of our model. We grew gross premiums written by 7%, driven by our new underwriting partners, And as our platform evolves, we will continue to expand on this. What sets us apart in the market is our ability to allocate capital across a diverse and expanding universe of distribution networks.

This gives us multiple differentiated points of access to the market and allows us to execute with agility. Third, we continue to successfully balance profitable underwriting with meaningful capital returns. Creating significant value for shareholders. This is underscored by the accretion to our book value per share which to reiterate increased by 7.2% in the first quarter alone. We continue to believe that our current market price of stock is undervalued, and as part of our capital management strategy, we repurchased $219 million of shares in the quarter. This includes $163 million bought through a privately negotiated transaction to repurchase all the remaining shares of 1 of our original PE sponsors CVC.

Importantly, following this strategic transaction, 65% of our shares are now in the public float. At current market valuation, we do not anticipate any further secondary follow on offerings with our remaining original and long term PE sponsors in the near term. Turning to our segments, Within insurance, we grew gross premiums written this quarter by 13%. Driven by the continued execution of our strategy to expand new underwriting partnerships across multiple lines of business. Property again delivered strong performance continued growth and new business momentum. Our disciplined underwriting approach has enabled us to maintain our margin through our leadership position and by optimizing our use of our reinsurance. Even amid a competitive environment and rate pressure.

This is evidenced by the fact that over the last 3 years, we have been running at an average sub-40% loss ratio for our property line. Despite an active cat and secondary peril environment. Within property, construction has had a strong start to the year. With growth driven by success in the open market, particularly in complex and post loss accounts. Where pricing and terms are more attractive. While some segments continue to experience pressure, we have remained selective. While continually adapting our underwriting approach. Asset backed finance and portfolio credit continued its strong performance with both our existing and new underwriting partners. As we continue to convert our pipeline of opportunities.

This is not only diversifying our portfolio, but giving us additional ways to grow in a market with high barriers to entry and where we have deep expertise. We continue to see strong margins across these products, which are insulated from traditional market cycles. In marine, we saw strong new business flow with a step change in marine war rates. Driven by conflicts in The Middle East. As a leader, our ability to quickly respond executing bespoke trades in the open market, enables us to actively manage our portfolio at the individual risk level. Our underwriting discipline is driven by a precise risk assessment process.

Along with our underwriting partners, we analyze each risk across critical factors like vessel, journey, crew origination, cargo, and beneficial ownership. Allowing us to underwrite vessel by vessel avoiding broader coverage through facilities. Outside of war, market conditions in hull cargo, and liability remain competitive. And we continue to prioritize underwriting discipline to maintain portfolio quality. Our political violence and terror lines also presented opportunities for growth in the quarter. Driven by our agile approach to selecting individual risks that meet our pricing hurdles. Pricing in The Middle East remains strong. We continue to benefit from our scale and lead position, enabling selected deployment and margin preservation attractive segments.

The evolving geopolitical landscape is creating new opportunities in this region, which we are well positioned to continue executing on. In our reinsurance segment, gross premiums written were $404 million for the quarter. This represented growth of 7% excluding the impact of the reinstatement premiums related to the California wildfires in Q1 25. We are pleased with the results of our January 1 renewal season, Our underlying portfolio is supported by strong margins and sustained demand. And we have delivered a 3 year average annual loss ratio in the sub-20% for this segment. Clearly demonstrating the healthy margin profile of the business.

Before I hand it over to Alan to discuss our first quarter results in more detail, I would like to take a moment to highlight how our capital allocator model uniquely positions us in this market. While the market is seeing increased competition in certain lines, today, that pressure is verticalized. By that, we mean the pricing difference between lead and follow markets continues to become more pronounced. And being a price maker, not taker, is increasingly important. As a market leader, continue to see strong pricing retention levels, and access to business.

Our ability to pick and choose how where, and when we execute across lines and geographies and with the right partners, gives us the flexibility to capitalize on the most attractive opportunities. For example, following the outbreak of conflicts in The Middle East, we immediately set an underwriting and risk appetite framework and working alongside our partners, we are among the first to underwrite risk and deploy capital. This enabled us to maximize pricing and set terms and conditions demonstrating our ability to not only match the right capital to the right risk, but also to the right partner at the right time.

In summary, our strong capital position deep relationships, and access to the market we continue to see significant opportunities for disciplined profitable growth. And as demonstrated by our results this quarter, the deliberate actions we are taking across the selection of our reinsurance strategy, and capital allocation position us to deliver strong performance throughout the cycle. And with that, I will turn the call over to Alan.

Allan Carl Decleir: Thanks, Ian. Pelagos Insurance Capital delivered operating net income of $88 million or $0.94 per diluted common share in the first quarter resulting in an annualized operating return on average equity of 15.2%. This performance was driven by another quarter of excellent underwriting results. Our combined ratio of 86.6% was a significant improvement of 29 points over the 2025. Our book value per diluted common share grew to $26.22. Including dividends, this increased by 7.2% delivering outstanding value creation in the quarter. Taking a closer look at our quarterly results, We grew our gross premiums written by 7% versus the same quarter last year to $1.8 billion. During the quarter, in the insurance segment, gross premiums written increased by 13%.

We saw continued growth from new underwriting partnerships in several lines of business. In the reinsurance segment, had growth of 7%, excluding the impact of the reinstatement premiums related to California wildfires in Q1 25. This growth was driven by new underwriting partnerships. Our net premiums earned were $515 million in insurance, and $54 million in reinsurance. Through our network of underwriting partnerships, we saw additional opportunities to strategically deploy capital in the quarter, including in lines that have an accelerated earning pattern, enabling us to exceed the expectations provided on our last call.

Looking into the second quarter, we expect net earned premiums to be similar to the first quarter in our insurance segment and $65 million to $75 million in our reinsurance segment. Our excellent underwriting performance resulted in a combined ratio of 86.6%. I will now break down the components of our combined ratio in more detail. For the quarter, our catastrophe and large losses were 12.7 points of the combined ratio, or $72 million. This represents a significant improvement compared to the same period last year when catastrophe and large losses were 55.3 points of the combined ratio or $333 million primarily related to the California wildfires.

As Dan said, the evolving geopolitical landscape particularly in The Middle East, has created underwriting opportunities for us. It is an ongoing situation, and we continue to monitor it. The loss experienced in the first quarter was minimal. During the quarter, our attritional loss ratio was 27.2 points of the combined ratio, consistent with the low levels we have reported over the last several quarters. We recognized net favorable prior year development of $3 million for the quarter, compared to $41 million in the prior year period. We had continued positive development on catastrophe losses and benign prior year attritional experience in our Reinsurance segment and better than expected loss emergence in multiple lines of business in our Insurance Segment.

In the quarter, we, like others, recognized increased loss Estimates Related To The Baltimore Bridge collapse. Turning to expenses. Underlying policy acquisition expenses were 26.8 points of the combined ratio for the first quarter, consistent with 27.8 points in the prior year period. Policy acquisition expenses to TFP were 15.3 points of the combined ratio in the quarter. The increase of 2.3 points from prior year related to the excellent underwriting results in the current year. Finally, our general and administrative expenses were $29 million in the quarter. This is consistent with what we shared on our last call and continue to expect through 2026.

Moving on to our investment results, Our net investment income was $44 million, consistent with the 2025. As of March 31, 92% of our portfolio is in cash and fixed maturity securities yielding an average of 4.4%. The fixed maturity securities have an average rating of a plus with an average duration of 2.7 years and a new money yield of 4.5%. Turning to taxes. Our effective tax rate for the first quarter was a -4.8%. In the quarter, we recorded a 1-time benefit due to the UK government updating its tax laws to conform with the most recent OECD guidance on pillar 2 global minimum tax.

Excluding this discrete item, our effective tax rate remains in line with our expectations at 16%. Turning to capital management. We are in a very strong capital position which has enabled us to grow our underwriting portfolio and also return capital to shareholders. In the first quarter, we repurchased 11.5 million common shares for $219 million at an average price of $19 per share which includes our previously disclosed repurchase from CVC. Our repurchases have been highly accretive on both the book value and earnings per share basis to our shareholders. Contributing $0.75 to our diluted book value per share in the first quarter alone.

We have repurchased an additional $14 million of common shares through May 8, with $185 million remaining on our share repurchase authorization. Since our IPO, we have repurchased $600 million of our common shares or 30% of our shares at an average price of $17.66 per share. We continued to pay a quarterly common dividend in the first quarter, and last week, we announced a $0.15 dividend payable in June. In April, we also redeemed our $125 million junior subordinated notes reducing our debt and resulting in a pro forma debt to capital ratio of 24.2% as of March 31. In summary, our financial results once again demonstrated strong earnings power.

As well as effective capital management resulting in 7.2% growth in book value per diluted share. And with that, I will now turn the call over to Johnny.

Jonathan Strickle: Thanks, Alan, and good morning, everyone. As Dan mentioned, at a time when the market is finding it more challenging, our model continues to drive profitable growth. As we grow and form new relationships with trading partners, As a capital allocator, we bring together underwriting partners, each with their own strengths, expertise, and differentiated access points to the market. Then based on our underwriting and risk appetite framework, we strategically allocate capital to the right partners to execute on our plan. Each of these partners has their own unique way of segments of the market. Utilizing several partners in the same marketplace enables us to grow and diversify in areas we already know and like.

And where we have extensive expertise. For example, in property, through the Fidelis partnership, we have broad access to the E and S market, which has been a great source of growth for the past few years. And it continues to deliver attractive underwriting margins. As competition has increased in that area, we have been able to complement our existing portfolio by expanding our focus and diversifying to other areas of the property market, through some of our new underwriting partners. An example of which is Bamboo Insurance, who are market leaders in providing coverage for homeowners in California and, similarly, our long term partnership with Euclid Mortgage enables us to diversify our mortgage book geographically.

Our existing European mortgage portfolio has performed exceptionally well over a number of years. However, achieving consistent access to The US market has historically been difficult. Due to the limited number of well established participants. By partnering with Euclid and leveraging their unique relationships in this market, we have been able to successfully grow our US mortgage book. Building a more diversified and robust overall portfolio. This highlights how we are leveraging the agility that our model provides us to change how we are accessing risks and driving profitable growth in existing classes of business we know well and like. These new partnerships are becoming an increasingly meaningful part of our business.

We have a strong pipeline of potential partners, and we expect continued growth with the partners we have already onboarded, as these relationships are structured with scalability in mind. So as opportunities develop, or market conditions evolve, we are able to scale efficiently, and access risk in a differentiated way. That complements and is diversifying to our existing portfolio. This underpins our full year outlook, and we continue to expect top line growth of mid single digits across the entire portfolio. Outwards reinsurance is another key area of focus for us. And it plays a critical role in managing exposures, reducing volatility, and continually optimizing our risk profile. This year, we have taken advantage of market conditions.

And leveraged our position to materially improve our outwards coverage. Moving to aggregate structures where possible on our Nat Cat protections, cutting quota share sessions on the most attractive lines of business, and purchasing a new whole account aggregate excess of loss cover reducing overall portfolio volatility, while enhancing margin. The combination of these actions has significantly improved our risk profile. And helps to offset rate pressure on our inwards book. We have now secured the majority of our outwards reinsurance for the year, and are very pleased with the position we are in today. I will now pass it back over to Ian.

Daniel Burrows: Thanks, Johnny. To sum it all up, our first quarter marks an excellent start to 2026. Our results speak to the strength of our business, and demonstrate the resilience of our approach as a strategic capital allocator. Our diversified portfolio deep relationships, and ability to allocate capital dynamically give us clear advantages in navigating an evolving risk environment. And at a time when market and risk selection matter more than ever, these differentiators will allow us to grow profitably and continue to deliver strong results. With that, operator, we will now open the line for questions.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. If you would like to withdraw your question, simply press 1 again. Before we take your questions, I would like to kindly ask everyone to please limit your question to 1 primary question along with a single follow-up. And if you have any further questions, please rejoin the queue. With that, our first question comes from Meyer Shields with KBW. Your line is open.

Analyst (Meyer Shields): Great. Thanks so much, and good morning. Alan, you mentioned that there was, I guess, adverse development on the Baltimore Bridge, and we have certainly seen that I was wondering, first, if you could maybe quantify the impact of this particular loss reserve increase and give us a sense as to the underlying, favorable development from up the line?

Jonathan Strickle: Hi, Meyer. it is Johnny here. Actually, I will take that 1. I will just give a bit of background on what happened on Baltimore first, then get to your question. So I mean, you have probably seen in the press, the state of Maryland announced a settlement with the international group over the quarter and we provide reinsurance for them. That came at a level above where the market had its reserve set. So reflecting that in our results had an impact on prior development as you have seen in the results that we reported through. To put that into context, I think we are really pleased with where prior year development is overall.

I mean, we ended the quarter with favorable prior year development. You factor the reinsurance color in as And I really think that demonstrates the resilience of the portfolio we can absorb significant impacts like this without resolving in a deterioration. In terms of the movement itself, I mean, what I can say on that is we moved our reserves appropriately in line with the underlying market loss and reflecting the dynamics of the various components of what is quite a complex claim. If I think outside of Baltimore, we also mentioned property DNS in our release, where we had 2 or 3 large losses coming through on the prior year on that.

So, to give a bit of context around that, Q1 is when we would really expect to see losses like that coming through. And these are events that happened at the end of 2025 and were reported to us in 2026 rather than deteriorations on things that we knew specifically about. At that point in time. But of course, we set IBNR provisions to allow for things like that. So, actually, even when you take into account those 3 loss coming through on D&F, D&F had favorable prior year development in the quarter, And I do not think that was clear in some of our release, so I just wanted to clear that up and provide clarity.

It actually ran at a sub 30% loss ratio. So, I think it is a really great marker actually to show rate adequacy in that class of business that even with 3 losses hitting our large threshold coming through on the prior year of 1 quarter, 30% loss ratio and favorable PYD overall. So, I just wanted to clear things up there. Hopefully that gets your question.

Analyst (Meyer Shields): I was looking for more consultation. Go ahead, I am sorry. Yeah.

Daniel Burrows: I was just going to kind of frame that Baltimore event. As you know, now it is the biggest marine loss in history. I say historically, my experience would tell me that type of event would move the market. So we would expect a price correction when the particular cover renews early next year. So right now, we are focused on opportunities. that is really the crux of our business, is not it? We are always looking for opportunity.

Analyst (Meyer Shields): Okay. No. Completely understood. If I can switch gears just briefly, I am trying to get a sense as to the lines of business where you are growing in reinsurance specifically. In the reinsurance pillar, is that right? Yes. that is right. Taking out the reinstatement premiums from last year. So there was some growth, and I am wondering which lines are reinsured. Or which lines you are growing your inward reinsurance.

Jonathan Strickle: Yes. Property cat reinsurance. We have a broadened offering out in that line in terms of lines of business. What we have done is add a new underwriting partner that we talked about a bit last time, Oak Global, A big chunk of their book is property cat reinsurance. I think they provide us a slightly different access point into that market. Their CEO, heads up the underwriting there, X-ray, 20 years, really well known in the market, a proven track record of delivering in that space. And as a capital allocator, we would like to have options. And I think having Oak alongside the Fidelis partnership to write property cat risk gives us access to more of the market.

And helps give us that optionality to flex between partners depending on where the market is at any 1 time.

Daniel Burrows: Yeah. And I think I just add, Meyer, we have very high hurdles for our underwriting partners for all of them. When we look at Oak in their first year as Lloyd's syndicate, they came in with a sub-85 combined ratio, which when we think about year 1 with expenses, that is a really good performance and ahead of our sort of target plan. So onboarding more of that is really what we are what we are looking to do in the future.

Analyst (Meyer Shields): Okay. Fantastic. Thank you so much.

Operator: Your next question comes from David Motemaden with Evercore ISI. Your line is open.

Analyst: Morning. Thanks so much for taking my questions. My first 1, you guys talked a bit about your outwards reinsurance. I am just wondering if you could you know, potentially size the savings that you achieved from Outwards Reinsurance this year and what is your outlook going forward? And you know, how much of that can offset some of the pricing pressure on the inwards book? Thanks.

Jonathan Strickle: Hey. Hey, David. it is Johnny here. I will start off on that 1. there is certainly price reductions in that space. I think we gave some color on that last time at about 20% if you think about it that way. The way we tend to deal with that is to buy more coverage. Rather than bank the saving. And we have certainly done that. I mentioned we bought an aggregate excess of loss cover that is more targeted around frequency of large loss. that is where some of the spend went Some of it came on lowering retention levels, relative to our overall portfolio or broadening coverage on an excess of loss basis.

So we really see it as an opportunity to enhance our risk profile and manage volatility down, rather than something to just bank as a cash saving?

Analyst: Great. Yeah. Thank you. Then I was just wondering if you could provide an update on RPIs. And I am most specifically interested in property D&F. I know you just mentioned that you still see that segment as rate adequate. But I would be curious how this has changed from year end or more broadly just in insurance and reinsurance versus the RPIs, I think, last disclosed in the third quarter, how those have changed? Thanks.

Daniel Burrows: Yeah. Thanks, David. it is Dan here. I will take that. Look. Firstly, I think you will hear from us a consistent theme with others you have heard in this earning season. It is a competitive market. But we think across our diversified portfolio, a 100 lines of business plus. Many of which are not actually impacted by market cycles. But we see plenty of margin Johnny's talked about loss ratios I think we scripted that earlier around the property direct running at the last 3 years, sub 40, property reinsurance, running sub 20 loss ratio. So plenty of margin in the business after years of compound increase.

That said, we would categorize the retrocession market as probably the most competitive. Where we have seen terms and conditions broaden, Johnny said, you know, 20% there thereabouts in terms of rate improvement. Is a bias that is been really good to improve margin. We look at probably direct property reinsurance, like others, we would say mid to high single digits, low double digit reductions. But there are other factors to think about. Obviously, our lead position how we can leverage that to get better terms and conditions in a verticalized market. How we use out with reinsurance, And again, talking about those loss ratios, there is plenty of margin in the book.

Obviously, we see an improvement in marine via the war-risk products, political violence, through the conflicts in The Middle East, but we are happy with the margin across most lines. I think still an outlier would be aviation, and we cut our premium as detailed in the last call by about 50% in the last year. We have not seen any upside there. But all about margins. So that is how we think about the market. Not so much about RPI, but we allocate capital to a risk because we think about the margin it provides to our portfolio.

Analyst: Great. Thanks so much.

Operator: Your next question comes from Leon Cooperman with Omega Family Office. Your line is open.

Analyst (Leon Cooperman): Thank you very much. I have a observation and a-- and a-- is there anything unusual in your first quarter results that you would consider non recurring? What do you think that is a good example of the earnings of the company?

Daniel Burrows: No. Obviously, the first quarter, we did have a large PNC with CBC. As I said on my introduction to the call, we do not anticipate any further secondary offerings in the near term with our existing original PE sponsors. Will continue to buy back shares. And when we think about underwriting, we will allocate to the highest margin business that we can. So other than that 1 P and T, there is nothing unusual in the quarter. So that means that the end of this year, would seem to me that your book value would be in excess of $30. If I just take the dollar and the earnings roughly in the quarter.

And multiply that by 3, remaining quarters of the year. Yeah. I think this is Yeah. You know, for the rest of the year, we could be close to $30. There or thereabouts. So I think, you know, that demonstrates since the formation of the business in 2023, we have grown book value per share by about 68%,, so it is quite exceptional growth and we continue to do that. And so long as we can consistently compound good quarters performance, combined ratio, increased book value, makes it impossible for investors to ignore that. So that is what we are focused on.

Analyst (Leon Cooperman): Yeah. that is my second observation. Know, I am not an insurance expert, but I am I am an analyst. So I basically the typical analyst has a price objective of about $22, $23, $24, which is below book value. See no reason why the stock's going to show below book value, giving you rates of return and how you allocate your capital. I am just curious, you know, the only explanation could be either that people think that you are earning in excess of what is normalized. You do not think it is the case or that people are not paying attention because you have not had the aging in the market.

So over time, I would expect that your returns will either -- your market will either do better, Or the market will be validated at its low price objective?

Daniel Burrows: Yeah. And we are working hard to make sure we are impossible to ignore. The compounding successful quarters on top of each other. is what we are striving to do. Right.

Analyst (Leon Cooperman): Okay. Very good. Well, good luck it seems to be the market is making a major mistake in valuing you guys. As long as they continue to make a mistake, they look at you as a buy-out capital and at a minimum, it should be worth book value, which is $30.31 And, you know, given your expertise in allocating capital, I think you deserve a significant premium to book value. If you were in line with the industry, your stock could be well over $30. and 1.5 times book Would be a reasonable number. And everybody tells me because of the structure of the company, that I am too optimistic. And I and I say no.

The management is allocating capital intelligently mister Brindle is a very good underwriter, and now we supplement mister Brindle with other people. They are gonna give you good investment opportunities. You can allocate to the best capital returns. So, you know, why are you selling your discount to book value? Do not understand.

Daniel Burrows: Yeah. And we and we agree, Leon. And I think what we would say is the performance is because of the structure, works exactly as intended, and we are gonna keep on doing what we do well.

Analyst (Leon Cooperman): Good. Good. I am happy. I own about 8% of the company. I am happy. Good. Thanks. Thanks, Leon. Thanks for the question.

Operator: Your next question comes from Alex Scott with Barclays. Your line is open.

Analyst (Alex Scott): Hi. Thanks for taking it. Can you expand just on what you are seeing in the pricing environment for you know, the wide I guess, more broadly in property, maybe separate from some of the niche areas they have grown into, like, you mentioned the Bamboo partnership, and I get that is very different. But in terms of the E and S property cat, we are hearing rates down as much as 30%. I mean, are you seeing in your markets? What are you doing to bob and weave around that? I mean, are you going to have to pull back in some of that?

Where it is not rate adequate, or do you feel like know, even with some of these moves, you are you are still finding know, good shots on goal?

Daniel Burrows: Yeah. Thanks, Alex. Look. First thing, as I have said previously, you just look at the loss ratios for our direct property books, sub 40% for the last 3 years, yes, there is more competition. We operate as a leader. We can restructure, reallocate, think about the risk, it is a verticalized market. What we are seeing is more in the single to high digit single digit decreases, low double digit decreases, but optimizing the outwards is how we think about it to improve the margin. So there is going to always be a range. We completely agree. We would not follow the market to the sort of extremes that you are talking about.

As a leader that is relevant to our clients, we do not have to.

Jonathan Strickle: Johnny here. I will just add to that. it is a very short tailed line of business. So I think if rate adequacy was starting to get tight, you would see that come through very, very quickly. As Dan said, we have run at less than 40% in aggregate since we launched the business. And this quarter in particular, we are less than 30%. And that is despite getting 3 big losses coming through that happened at the end of last year. I think that really shows 2 things that rate adequacy for us is still in a great place And outwards reinsurance has helped us manage the volatility and improve margins in that line as well.

Daniel Burrows: Yeah, I think I Shane again, it goes back to the point, when we think about the market, it is not about the RPI. it is about the margin in the business. And that is how we allocate our capital.

Analyst (Alex Scott): Makes sense. Okay. Thank you. And then could you give us, you know, more on just, you know, how impactful some of these partners you are bringing online are to the capital you are deploying? And are there an increasing amount of opportunities there Is that something we expect to continue to grow those partnerships? I just want to think through how that can support growth.

Jonathan Strickle: Hey, Alex. it is Johnny here. I will take that 1 as well. In terms of our growth, yeah, they have been a meaningful component of that. We said last time they were around half of our growth last year. They have continued to grow into Q1 this year. I do not think that is growing the number of partners we do business with in a dramatic way. I mean, I think that is something that is certainly not going to be in the hundreds. You know, it is going to be in the tens for sure.

And the way I try and think about that is at the moment, every single partner we onboard, every opportunity they bring, the entire management team is fully engaged in reviewing that and deciding how to size it, how to approach it, how to execute on it. And we will not move away from that. So it will not get to a quantity where we are not able to do that anymore. What I would point is some of the partners that we have talked about publicly, Euclid and Oak being great examples. Are really scalable platforms. So, they are growing in their first few years of business. We are able to grow with them alongside it.

And actually scalability is 1 of the key factors we think about when trying to onboard partners. So when I think about that strategy into the future, I would expect this to grow with new underwriting partners, but do not expect that to be a continual increase in terms of number of partners. Some of it is going to be growth with existing.

Analyst (Alex Scott): Okay. Alright. Thank you.

Operator: Your next question comes from Pablo Singzon with JPMorgan. Your line is open.

Analyst: Hi. Hi. This is Kevin on for Pablo. Just wanted to hear what your mid- to medium-term outlook was for the mortgage partnership with Euclid. I think a lot of the growth that has come from Euclid has been taken in larger share of the mortgage reinsurance market. So with the underlying market not growing as much what are your thoughts on medium term growth?

Daniel Burrows: I think actually, I think Euclid made an announcement yesterday. So, you know, consistent with that, we see opportunity for growth, but we also can grow with the partnership. They have a very performing portfolio there as well. So that is really what it is all about. it is combining the partnership with new underwriting access to build a really strong platform for growth. Yeah, we are we are excited. And we see opportunity there. Yeah.

Jonathan Strickle: I think it is Johnny here. it is all about balance. In sort of asset backed finance class of business. it is trying to get balanced geographic by industry, by product type, by distribution point into the market. We had not historically had much of a footprint in The US market, so naturally there is more room for us to grow there. And by growing there, helps diversify the portfolio. And I think Euclid is a great partner to execute on that with. Great. Thanks. And then on the loss experience, loss experience has been good in recent quarters. Is that changing your full year outlook on loss ratios?

I think you had said mid-40s, ex-PYD, last quarter, but you have been running the high-30s, low-40s. Hey. it is Johnny here. I mean, we are still comfortable with our mid-40s pick, I think. I mean, obviously, we are pleased to have beat that the last 2 or 3 quarters. And hope we do into the future. But I think that is an appropriate place to set expectations.

Analyst: Great. Thank you.

Operator: Your next question comes from Andrew Andersen with Jefferies.

Daniel Burrows: We are only 6 weeks into Q2. There have been some very high profile losses in the market. Our exposure to those is very manageable and well within a large loss load. Think it is also a really good example of the capital allocator model and how we work with our partners. We were very quickly able to set an underwriting risk appetite and framework We allocated our capital to the Fidelis partnership. We think they are best in class. They have a significant experience. Depth of knowledge, and the best place to take advantage of opportunities that we are seeing. But our approach is also a little bit different to others.

We prefer to individually write each risk on its own merits. So when we think about war breach, we would look at per vessel, per voyage, we think that is essential in a live fluid environment. And a much more accretive route to the business rather than writing facilities, which often end up giving you a broader cover. You do not really get the data. Exposure tracking is less precise. We are seeing we are seeing opportunity. Political risk, to the side, been running really, really well. We have been seeing a good pipeline of business before and during this conflict, but the immediate opportunity is more around lines like war-risk political violence, and terror. Thanks.

And you mentioned earlier on the call just some competition in certain lines. Can you just expand a bit on how durable you think the pricing advantage is from being a lead underwriter? Are you seeing any signs of maybe follow-up follower catch up compressing that pricing advantage? No. If anything, we are seeing a more pronounced data verticalization. You are seeing follow markets that even shown renewals. that is happening. And that is what happens in a more competitive environment. We have got to make sure that we are relevant.

We stay leveraging our position, multi class, there is been very attractive compound increases for the last 6, 7, 8 years in some classes, and I think the loss ratio is especially that we talked about demonstrate the margin in the business. You can then use outwards reinsurance to supplement the margin. So at the moment, it works for us. We are confident with our targets for the rest of the year. You just got to work hard. it is as simple as that. Thank you.

Operator: Your next question comes from Mike Zaremski with BMO. Your line is open.

Analyst (Mike Zaremski): Hey. Thanks. Good morning. Nice to see the stock popping this morning. I guess my question is well, specifically, whether directionally Fidelis has headcount growth, kind of aspirations within a corridor, maybe near term or longer term? And I ask, I guess, the context of kind looking at some of the employee and G and A growth, of juxtaposing that with the market environment, but also some of the things you guys are doing, with third parties. And then also with the pretty material Bermuda tax credits that also, come online, know, came online last year and will continue to come online. Thanks.

Daniel Burrows: Yeah. Thanks, Mike. Just to remind you, we are Pelagos and, you know, the structure was built meant to be efficient, meant to be lean. And that will continue into the future. So I mean, there is multilayers to your question. I do not know if you Johnny?

Jonathan Strickle: Yeah. Being lean is really important to us. I think. And we can we feel we can execute the strategy that we started on in the last year, year and a half in terms of moving to new underwriting partners and remain lean I think 1 of the big advantages you have from being a lean company is it opens up margin to spend on reducing volatility. The new aggregate excess of loss cover is a great example of that. We have been able to access the property market but not take cap risks to have an event cap that completely removes that and the margin still remains attractive. How do you get there?

You get there by having a really low expense ratio. So, it is something that we have got an eye on. It is something that I think in terms of a long term run rate, we have given some color on before. But it is certainly not something that we see growing as a percent of premium.

Analyst (Mike Zaremski): Got it. that is helpful. So, I guess just switching gears. I do not think it was touched on, but if it was, you can you can it would a short answer. But, in the press release, you talked about nonrenewing cyber policy. I know that there is plenty of very, you know, high quality peers that have set that line of business, you know, probably does not typically meet their appetite in terms of making it a much bigger line of business, in their portfolios. But maybe you can kind of touch on what is taking place and that marketplace and why it was not renewed? Thanks.

Jonathan Strickle: Sure. I mean, for us, I think we have been pretty consistent on how we think about cyber. The bit that is stopped us entering that market in the past has been the systemic risk. So risk in the tail. A product that emerged over the past few years was capped quota shares, so us reinsuring someone else and having a loss ratio cap that really removed the worry about that systemic risk. that is when we entered into the cyber market and we are successful in doing a number of deals. As we come into this year, there is been press in some places on where those caps are or having them removed completely.

I think that is a term and condition that we just cannot move on. So where we cannot get the cap to be a level that we find acceptable, then we would walk away from it. And that is exactly what is happened with the example that we mentioned this quarter.

Analyst (Mike Zaremski): that is good color. Just lastly then, do the cyber policies kind of are they stand alone? Or do they touch other policies that need to be kind of written in a bit of a package when you know, when you when you broker them through, you know, when you are buying them through the brokers.

Daniel Burrows: Yeah. Thanks. it is Dan here. that is a stand alone single policy. We effectively just did not like the structure. Simple as that.

Analyst (Mike Zaremski): Thank you.

Operator: Your next question comes from Robert Cox with Goldman Sachs. Your line is open.

Analyst (Rob Cox): Hey. Thanks. Good morning. Yeah, I am just curious, a question on the new partnerships. As you expand beyond the Fidelis partnership with these new partners, how do you maintain the same level of differentiated underwriting as you have with the Fidelis partnership where you have the frequent underwriting meetings and the right of first refusal, Are you employing any of those same arrangements with these new partners, or is it more about selecting them at the beginning of the partnership?

Jonathan Strickle: Hey, Robert. it is Johnny here. I will kick off on that 1. I think it is 1 of the attributes we look for in a partner. We want someone that truly wants partnership. And by that, we mean they want our input into their business plan, how they what their risk profile is. If it is someone that is not looking to do that, then they would fall at the first hurdle and it would not be someone that we entered a partnership with.

In terms of them monitoring that as they execute on it for us, with the Fidelis partnership right over 100 lines of business, we have been doing that since we split the business and there is a whole oversight framework we put around that. Which we have copied over to new partners effectively. So yes, we are just as involved with them. Obviously, there is proportionality in terms of sizing of different partnerships and how much of our time we spend on it. But it all goes through exactly the same process same level of oversight. And like I say, 1 of the key things we look for in a partner is a partner that is open to that.

Analyst (Rob Cox): Okay. Great. Thank you. And then just as a follow-up, just a question on premium leverage. You know, at least on a GAAP basis, we have noticed the premium leverage at 1.3 times surplus, which we kind of have observed is more or less similar to some of the other companies we follow. That have less exposure to property short tail lines that you know, may have more volatile underwriting returns. So I am just curious how should we be thinking about where the firm is comfortable running the business within its risk framework going forward.

Allan Carl Decleir: Thanks, Robert. it is Alan here. Absolutely. Yeah. Our approach to capital allocation has been similar to the last few quarters. We are always looking for opportunities to strategically deploy capital into profitable underwriting But certainly, as you have seen over the last few years, we are more into the specialty market and less into the nat cat space, and we are 80% insurance now and 20% reinsurance. Also, with our capital management strategy, we have bought back, as I said in my prepared remarks, 600 million of shares over the last 3 years. So we are a lot more efficient, I guess, on the capital management front.

So when you look at premium to surplus between the types of business we write, our level of capital, our level of debt. We are a lot more efficient than we used to be. And I think what you are seeing now is where we are comfortable in terms of capital, in terms of rating agencies, in terms of regulators going forward.

Jonathan Strickle: it is Johnny here. Just to add to that, in terms of the risk profile, I mean, there is no real change in that relative to the premium that we have been writing. And what I would point to there is, as we have said before, the number of options in the outwards reinsurance space, whether it is through bond, ILW, UNL cover, has really opened up in the last 18 months or so. So we have been able to take advantage of that to keep the net risk profile where we want it relative to our capital position.

Analyst (Rob Cox): that is helpful. Thank you.

Operator: Your next question comes from Matthew Carletti with Citizens. Your line is open.

Analyst (Matt Carletti): Just a follow up to Andrew's question a few questions ago. Ian, specifically around some of the opportunities coming out of Middle East, war breach, political violence, etcetera. Just in terms of timing, you know, when the event kind of started in the quarter, can you just help us a little bit of context understand kind of how much of those opportunities might be reflected in kind of what we saw in the quarter versus how much of those might be coming in the future, whether it be 2Q or forward?

Daniel Burrows: Yeah. Yeah. Thanks, Matt. Thanks for the question. Yes. I look. I think it obviously spans both Quarters. You will see you will see a bigger uptick in Q2. Than Q1. I think that is probably the only way I can really frame it for you. But it is not it is obviously an ongoing situation. Still see opportunity in that area. But it is gonna be loaded more to 2 than it was in Q1.

Jonathan Strickle: Just keep in mind, it depends how people participate. If you participate through a facility or you give a pen away to some extent there, you may have booked your expected uptick in that in the first quarter. Whereas if you write risk by risk and look through to the underlying, then it is just as you accept each policy.

Analyst (Matt Carletti): Alright. Great. Thank you.

Operator: Thank you. That concludes today's question and answer session.

Daniel Burrows: I would like to turn the call back to Daniel Burrows for closing remarks. Thank you very much. We really appreciate everyone joining us today. If you do, as usual, have any additional questions, we are here to take your calls. We thank you for your ongoing support, and I hope you will enjoy the remainder of your day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.