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Best of both worlds – Fidelis Insurance Group

28.06.24 AdvantageGo

Dan Burrows, group CEO of Fidelis Insurance Group, was the latest guest of the Voice of Insurance podcast, produced in association with AdvantageGo. He characterised Fidelis’ recent reformation as “the best of both worlds”.

Fidelis is a well-known player in the specialty (re)insurance market, but has undergone an unprecedented transition in recent years – reordering the business into two distinct entities, albeit ones that continue to work closely together.

As group CEO of Fidelis Insurance Group, Burrows runs the insurer part of this first-of-its-kind hybrid structure, while the managing general agent (MGA) arm, known as the Fidelis Partnership, is led by led by fellow (re)insurance market veteran CEO, Richard Brindle.

Burrows provided some details about how the bifurcation has played out in the busy months since then. For instance, some 40% of the staff now on Burrows’ side of the business came from the original Fidelis, he noted.

Aside from garnering the essential nods and approvals from regulators and ratings agencies, Fidelis Insurance Group has also floated as a public company, and completed a secondary capital raise – raising $2bn in the process. This he said, “speaks volumes” about not just the people in the business, but support from the market, from clients, brokers and investors.

“What we have done in the last 18 months is prove that the concept works. The relationship is working exactly as intended. We’re able to match the right capital against the right risk,” Burrows said.

Since the Initial Public Offering, and then capital raising, Burrows has spent a lot of time talking to investors, with inevitable questions about how this unprecedented restructuring works between the two halves of an insurance business.

“Naturally, people ask a lot of questions around the structure. How’s it working; [on] commissions, who does it benefit; does one side win; does one side lose? Well, we both win.

Now, questions tend to focus not on the structure, but the benefits to reap, in part from its synergies.

 “Now, the focus is on market, duration, performance, growth, aspiration,” Burrows said. “We don’t use terms like bifurcation. It’s a hybrid union of capital with underwriting, and the stakeholders on both sides are a union.”

Another foundation of that positivity is the widely flourishing market opportunities, as “quarter on quarter, we’re beating [our] plan”, Burrows suggested, with market conditions continuing to look good for specialty insurers and reinsurers.

“We’re still in the best market we’ve seen in decades. It is a mature, hard market with compounded increases across most, if not all, lines, and that positive movement is still continuing,” Burrows said.

The hybrid union at Fidelis allows for more time on the “core competency” of capital management. On the other hand, Burrows emphasised that some respects of the relationship between the two arms have not changed much, with daily interaction between the two CEOs on underwriting matters.

“There’s a huge alignment and a huge overlap, and that’s beneficial to both sides,” Burrows said.

“I want to be involved with the partnership on the underwriting side. When I get in the office in the morning, we have an integrated underwriting IT platform, so I can see exactly what’s been written, and Richard and I talk daily about risk and we’re involved in the origination.”

He continued: “We’re in the best of both worlds here, because we are unemotional when we think about underwriting risk. We want to take a clear, concise view of our appetite, of our own view of risk, but we’re connected enough to be able to outline to investors what is really going on the market with confidence.”

One major piece of London market news – highlighting continued close synergy between these ‘two Fidelises’ – has been for Fidelis Insurance Group to back the syndicate launched at Lloyd’s by Fidelis Partnership, a move in collaboration with private capital provider Hampden Agencies.

This new Asta-managed Syndicate 3123 has an initial target of $180m of gross written premium (GWP) in the second half of 2024, rising to $450m of GWP in 2025. Burrows emphasised that the syndicate could be expected to grow to much higher levels in the medium term, stressing the value of Lloyd’s for accessing a broader basket of business.

“It gives us access to new clients, new territories, which you just wouldn’t be able to get unless we went through a Lloyd’s platform or put a flag down everywhere in the world, which would not be efficient for us,” he added.

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