Q2 2025 Fidelis Insurance Holdings Ltd Earnings Call

Amanda This call is being recorded for replay purposes.

Following the conclusion of formal remarks, the management team will host a question and answer session and instructions will be given at that time.

With that I will now turn the call over to Rhonda Hunter head of Investor Relations MS. Hunter. Please go ahead.

Good morning, and welcome to Fidelis Insurance Group second quarter 2025 earnings Conference call.

With me today are down boroughs are CEO, Alan declare our CFO I'm Johnny Circle, our group managing director.

Before we begin I'd like to remind everyone that statements made during the call, including the question and answer section May include forward looking statements.

These statements are based upon managements current assessment and assumptions.

And are subject to a number of risks and uncertainties on emerging information developing over time.

These risks and uncertainties are described in our second quarter earnings press release, our most recent annual report on 20-F and other reports filed with the SEC, which are available on our website, a Dallas insurance Dot com.

Although we believe that the expectations reflected in forward looking statements have a reasonable basis. When made we can give no assurance that these expectations will be achieved.

Consequently, actual results may differ materially from those expressed or implied.

For more information, including on the risks and other factors that may affect future performance investors should review the safe Harbor regarding forward looking statements included in our second quarter earnings press release.

<unk> on our website, a Dallas insurance dot com as well as our other reports that are filed by us with the SEC from time to time.

Management will also make reference to certain non-GAAP measures of financial performance.

A reconciliation to U S. GAAP for each non-GAAP financial measure can be found in our current reports on form 6K furnished to the SEC yesterday.

Which contains our earnings press release and is available on our website at Fidelis insurance Dot com with that I'll turn the call over to them.

Thanks, Brandon good morning, everyone.

Thank you for joining us today.

I'd like to take a minute before discussing our quarterly results is a reflection of the past two years since the launch.

I'm incredibly proud of <unk> achievements during this time.

We have established ourselves as a market leader.

With a high quality scale and diversified portfolio focused on short tail specialty risks.

Our strategy structure and the positioning and.

Provided us with the flexibility discipline, our market access to deploy capital, where we believe there were attractive risk reward opportunities.

And we have demonstrated our ability to balance the virtues of profitable underwriting, which capital returns to shareholders.

In fact since 2022, we have delivered gross written premium growth of 54% an.

And increased our book value per diluted share by 39%.

<unk> common share dividends.

This year also marks the 10 year anniversary of the launch for Douglas.

But the data ownership remains a cornerstone painter watching.

Watching over 100 products across all major lines of business.

Since our inception, we have maintained a collaborative and innovative approach to underwriting.

And leveraged our longstanding relationships with brokers and clients.

Establishing <unk> positioning and facilitate cross sell opportunities.

The tremendous partnership are such a high bar for any additional partnerships.

Actively expanding our platform as we continue to evolve our business with a focus on deploying capital to the right risks.

This year, we have successfully on boarded new strategic partners with proven track records and highly accretive lines of business.

And we continue to see an accelerating pipeline.

Our structure continues to what exactly changes provide.

Providing access to the best underwriters in the industry and ensuring an enhanced level of rigor around risk selection.

Turning to the quarter I want to highlight three key takeaways all.

All of which will be important context for todays discussion.

First.

Any remaining exposure to the Russia, Ukraine lifestyle policy litigation is insignificant and we can now draw a line under this.

Secondly, we continued to take advantage of profitable growth.

Hosted by very attractive margins across the portfolio as a whole.

And finally, our capital position remains strong.

Which gives us the flexibility to enhance shareholder returns is demonstrated by the recent expansion of our capital management initiatives announced last week.

With this in mind through the first half of the year. We grew our gross written premiums to $2 $9 billion.

Resulting in year to date growth of 9% driven by high retention levels and new business opportunities across the portfolio.

Including business from third parties.

The combined ratio for the quarter was 103, 7%.

Flexing the impacts of the English high court judgment on the aviation and Aerospace, Florida business in relation to Russia, Ukraine Lesser policy litigation.

Which was within the range of expected outcomes, we disclosed last quarter.

Our annualized operating on.

He was two 3% for the quarter with net income of $20 million.

Operating net income of $14 million.

Excluding the impacts of Russia, Ukraine Nessa policy litigation, we have outperformed our first cycled sockets.

Keeping our combined ratio in the mid Seventy's for the quarter.

And significantly supposedly all all I E targets.

Additionally.

We would have significantly outperformed our year to date targets, but the combined ratio.

On a basis.

With the low end of drawn under this we are focused on capitalizing on the opportunities ahead of us to drive accretive growth and returns.

Taking a closer look at performance across both of our segments.

Our position as a market leader enables us to achieve favorable signings with preferential rates terms and conditions.

Upholding a clear differential some markets.

Within our insurance segment, we did have a 7% premium growth in the quarter as we continue to deploy capacity into higher margin areas.

Supported by a strong flow of new business across the portfolio.

Overall, our segment RPI was flat for the quarter and we maintained our disciplined approach and walks away from underpriced business.

Our <unk> property book continues to deliver strong returns.

Benefiting from the compound rate increases we have achieved on a sustained basis.

It's important to understand that property is a tiny based client market.

This allows us to achieve significant pricing differentials compared to subscription market players.

As a market leader, we are positioned to write private less leverage on line choice and flexibility to deploy across programs and offer clients capacity on a cross close basis.

This has enabled us to achieve high retention levels and maintain our discipline on terms conditions and rate movement to achieve leadership terms and pricing.

Overall opioids are down slightly but pricing adequacy about portfolio remains at one of the highest levels we've seen in decades.

Yeah.

I think like finance and portfolio credit remains a core growth triangle as we executed on a number of potline structured credit deals and continue to recognize revenue from a third party relationships.

These more bespoke insurance lines, where the buying motivation is often driven by capital relief where underlying transaction facilitation.

Insulates us from traditional insurance pricing cycles.

And we continue to see a healthy pipeline with both new and repeat clients.

We leave substantially all of its business demonstration about who we are able to bring clients on structuring value, adding products. We see aviation is the most challenged part of our portfolio.

And we will not write business that does not meet our underwriting hurdles.

As such we have not renew certain accounts originally forecast for the year.

We continue to monitor developments in pricing and leverage our line across the sub classes.

We are beginning to see signs of small pricing adjustments on select accounts and the overseas sector.

Heightened loss activity and remain well positioned to take opportunity, where we see margin and adequacy.

As a reminder, we are not willing to compromise on our underwriting discipline.

We'll continue to deploy capital in more creative ways until we see signs of sustained market improvement.

Turning to reinsurance on the back of strong Grace over the past few years a premium in the quarter was broadly in line with prior year as we continue to focus on optimizing the portfolio with core clients.

We are seeing some movement in pricing in certain parts of the portfolio due to increases in capacity levels, but the fundamentals of this portfolio overnight.

We continue to deploy capacity.

Really in line with our view of risk.

Looking at full one Japanese renewals being nimble, we shifted capacity from the less compelling excess of loss deals so both proportional coverage.

Allowing us to benefit from the underlying rate improvements coming through.

Right adequacy largely held at six one which was dominated by U S property.

With a number of exceptions on programs, where they maintain discipline and walked away.

For the six month renewal our portfolio, so the largest price innovation buoyant northeast and Hawaii segments.

Modest decline in Florida.

Which aligns with our strategy and risk appetite going into midyear.

We continue to see attractive opportunities to deploy capacity effectively in line with our view of risk and continued year to date Chris.

Turning to our reinsurance it sounds as a core component of our portfolio management strategy.

This approach allows us to leverage the market on both the inward and outward signs about book to optimize margins.

Our strategy is always focused on using reinsurance to reduce volatility minimize potential net losses enhance margins unsecure leading positions across lines.

We do this through both traditional reinsurance markets and capital markets instruments.

And we constantly review our program to optimize protection and manage exposures.

Dynamics within the out which market continues to provide attractive opportunities.

We were able to capitalize on these dynamics to sponsor the hubby seven cat bonds.

Advantages of strong investor appetites.

It's approaching $90 million of limit on an aggregate multi peril region basis.

This replaces the expired hobe three bonds, which responded as intended to various cash events across the past 12 months.

In a traditional market, we successfully renewed cat protections of the Dana broke up for one <unk>.

Taking advantage of attractive pricing attachments levels and capacity.

As a reminder, we are an active buyer of our broad suites of products.

<unk> index and across a whole Atlas program, we achieved a significant improvement in <unk> year to date.

Turning to capital management as I mentioned last week, we announced a meaningful expansion of our capital management initiatives.

Redoing, our common share repurchase authorization to $200 million and raising our quarterly dividend to <unk> 15.

As we have said before we do not believe our current stock price appropriately reflects the value of our platform.

Current dislocation provides an excellent opportunity to deliver value to our shareholders in a highly accretive way.

Our strong capital position gives us the flexibility to enhance returns while continuing to pursue attractive underwriting opportunities.

And with that I will pass.

So this is Alan to provide more color on our second quarter financial results.

Thanks, Dan and good morning, everyone.

Taking a closer look at our quarterly results. Our net income was $20 million or 18 cents per diluted common share.

We had operating income of $14 million or 12 cents per diluted common share.

This resulted in an annualized operating return on average equity up two 3%.

We continued to grow our book value per diluted common share.

Now stands at $22 and four sites.

In the second quarter, we grew our gross premiums written by 2% to $1 $2 billion bring.

Bringing our year to date gross premiums written to $2 $9 billion, an increase of 9% versus the same period last year.

In the insurance segment gross premiums written increased by 7% in the quarter and $902 million.

This growth was driven by increases in our asset backed finance and portfolio credit.

And clinical risk violence and pair lines of business.

Meanwhile, in the reinsurance segment gross premiums written were $317 million for the quarter compared to $346 million in the prior year period.

For the first half of 2020 five.

Premiums written increased 7% and insurance and 15% in reinsurance.

As we continued to capitalize on attractive growth opportunities.

Maintaining a disciplined approach to underwriting opportunities that did not.

Meet our thresholds.

Our net premiums written increased by 4% versus the second quarter of 2024, and our net premiums earned increased by 7% for the same period.

Driven by the growth in net premiums written in the current and prior year periods.

Turning to the combined ratio of 103, 7% for the quarter.

I'll break down the components in more detail.

During the second quarter, our Attritional loss ratio continue to trend positively improving at 24, 7%.

The first half of the year 23, 7%.

This compares to 25, 9% in the first half of 2024.

The strength of our underlying portfolio.

Our catastrophe and large loss ratio was 13, 8% or $74 million of losses.

Selecting a lighter catastrophe and large last quarter compared to the same period last year.

Our catastrophe and large loss ratio was 36, 2%.

Or $181 million.

Catastrophe and large losses in the quarter included an air India loss of $26 million and our aviation Aerospace line of business.

We recognized net adverse prior year development of $89 million in the second quarter.

This compares to net favorable prior year development of $69 million in the same period last year.

Reinsurance segment experienced net adverse development of $113 million in the quarter.

As discussed is primarily a race to the judgment handed down by the English High Court regarding the Russia, Ukraine Aviation litigation.

Excluding the judgment, we are pleased with the strong performance of the underlying insurance portfolio as we recognized favorable reserve development across the book, including better than expected loss emergence in our property line of business.

We continued to have favorable development in the reinsurance segment.

Which was $24 million in a quarter.

And by a positive development of prior year catastrophe losses.

And benign prior year Attritional experience.

Turning to expenses.

Policy acquisition expenses from third parties were 31 four points of the combined ratio for the second quarter.

Compared with 28 four points in the prior year period.

While we may see movements quarter to quarter.

Policy acquisition expenses are in line with expectations and we continue to anticipate our annual policy acquisition expense ratio to be in the low thirties and in the mid twenties and insurance and reinsurance segments respectively.

Book, including better than expected loss emergence in our property line of business.

We continued to have favorable development in the reinsurance segment.

Which was $24 million in the quarter.

Given by positive development on prior year catastrophe losses.

In line with our half year results of 36% in insurance and 23, 4% and reinsurance.

And benign prior year Attritional experience.

Turning to expenses.

That's the that was partnerships commissions accounted for 13, one points of the combined ratio for the quarter.

Policy acquisition expenses from third parties were 31 four points of the combined ratio for the second quarter.

Paired with 15.0 point in the second quarter of 2024.

Compared with 28 four points in the prior year period.

There was no profit commission of crude in the quarter as the underwriting profit did not meet the required hurdle.

While we may see movements quarter to quarter.

Policy acquisition expenses are in line with expectations and we continue to anticipate our annual policy acquisition expense ratio to be in the low thirties and in the mid twenties and insurance and reinsurance segments respectively.

Finally.

Our general and administrative expenses were $22 million versus $24 million in the second quarter of 2024.

The decrease in expense was driven by lower variable compensation accrued in the quarter.

In line with our half year results of 36% in insurance and 23, 4% and reinsurance.

Moving on to our investment results, our net investment income for the quarter was $45 million compared to $46 million in the prior year period.

The Pinellas partnerships commissions accounted for 13, one points of the combined ratio for the quarter.

In addition to our net investment income we had net unrealized gains on other investments of $5 million.

Impaired to 15.0 point in the second quarter of 2024.

There was no profit commission of crude in the quarter as the underwriting profit did not meet the required hurdle.

As a result of our strategic deployment of assets into a diversified hedge fund portfolio at the end of 2024.

Finally.

This portfolio now represents approximately 5% of our total investable assets.

Our general and administrative expenses were $22 million versus $24 million in the second quarter of 2024.

And as part of our ongoing strategy to generate superior risk adjusted diversified investment returns.

The decrease in expense was driven by lower variable compensation accrued in the quarter.

And enhance shareholder value.

Moving on to our investment results, our net investment income for the quarter was $45 million compared to $46 million in the prior year period.

As of June 30, the average rating of our fixed income securities remains very high at a plus for.

With a book yield of 5.0%.

In addition to our net investment income we had net unrealized gains on other investments of $5 million.

Reflecting the steps we've already taken to optimize our portfolio.

Average duration remains consistent with year end at two eight years.

As a result of our strategic deployment of assets into a diversified hedge fund portfolio at the end of 2024.

Turning to tax.

This portfolio now represents approximately 5% of our total investable assets.

Our effective tax rate for the first half of the year was 18, 9% compared to 14, 6% in the first half of 'twenty 'twenty four.

And as part of our ongoing strategy to generate superior risk adjusted diversified investment returns.

This rate reflects a greater proportion of pretax income generated in higher tax rate jurisdictions.

And enhance shareholder value.

As of June 30, the average rating of our fixed income securities remains very high at eight plus.

And the full year, we expect our effective tax rate to remain in the 19% range given the expected mix of profits and losses across three countries.

With a book yield of 5.0%.

Reflecting the steps we've already taken to optimize our portfolio.

Looking at our capital management strategy.

Average duration remains consistent with year end at two eight years.

During the quarter, we executed a number of key actions and we recently announced a significant expansion of our capital management initiatives.

Turning to tax.

Our effective tax rate for the first half of the year was 18, 9% compared to 14, 6% in the first half of 'twenty 'twenty four.

We continued to return capital to shareholders through a combination of dividends and share buybacks.

In the second quarter, we repurchased $5 5 million common shares or $88 $7 million at an average price of $16.17 per common share.

This rate reflects a greater proportion of pretax income generated in higher tax rate jurisdictions.

And the full year, we expect our effective tax rate to remain in the 19% range given the expected mix of profits and losses across three countries.

This includes $3 1 million common shares that were repurchased through a privately negotiated transaction with C. D C.

It remains one of our long standing shareholders, having owned our shares since our founding.

Looking at our capital management strategy.

During the quarter, we executed a number of key actions and we recently announced a significant expansion of our capital management initiatives.

This brings our shares repurchased year to date to $6 9 million common shares at an average price of $16.01.

We continued to return capital to shareholders through a combination of dividends and share buybacks.

That's approximately 73% of our current diluted book value per share and.

In the second quarter, we repurchased $5 5 million common shares or $88 $7 million at an average price of $16 17 per common share.

And that's highly accretive on both the book value and earnings per share basis to our shareholders.

Since the commencement of our share repurchase program in 2024.

Our strategic approach to share repurchases has provided $79 million to shareholders.

This includes $3 1 million common shares that were repurchased through a privately negotiated transaction with CVC.

73 cents to our book value per share.

Additionally.

It remains one of our long standing shareholders, having owned our shares since our founding.

Last week, we announced that our board approved a renewal of our repurchased authorization given the strength of our balance sheet, which brings our total current authorization to $200 million.

This brings our shares repurchased year to date to $6 9 million common shares at an average price of $16.01.

The board also approved an increase to our quarterly common dividend to <unk> 15 per share.

That's approximately 73% of our current diluted book value per share.

Bringing our dividend yield to three 6%.

And that's highly accretive on both the book value and earnings per share basis to our shareholders.

Also on the capital management front we.

Since the commencement of our share repurchase program in 2024.

We successfully completed a $400 million issuance of fixed rate 30 year subordinated notes during the quarter.

Our strategic approach to share repurchases has provided $79 million to shareholders.

The offering was met with robust demand from a broad base of high quality institutional investors.

73 cents to our book value per share.

Which we view as a clear vote of confidence in our balance sheet, our underwriting strategy and long term growth outlook.

Additionally.

Last week, we announced that our board approved a renewal of our repurchased authorization given the strength of our balance sheet, which brings our total current authorization to $200 million.

Our debt to total capital ratio stands at 26, 6%.

The board also approved an increase to our quarterly common dividend to <unk> 15 per share.

Which reflects the raising of the subordinated notes and the redemption of our remaining preference securities.

Bringing our dividend yield to three 6%.

Our capital position provides increased flexibility as we look ahead.

Also on the capital management front we.

Including as we approach the interest rate reset for a junior subordinated notes in April 2026.

We successfully completed a $400 million issuance of fixed rate 30 year subordinated notes during the quarter.

Another important part of our capital management strategy is outwards reinsurance and we're constantly optimizing our purchasing program.

The offering was met with robust demand from a broad base of high quality institutional investors.

Which we view as a clear vote of confidence in our balance sheet, our underwriting strategy and long term growth outlook.

As Dan noted, we sponsored a new cat bonds under our Hermie re program during the quarter.

Our debt to total capital ratio stands at 26, 6%.

Which resulted in a slight increase in our ceded premium written.

For the full year, we continue to estimate that a 40% session rate across our entire portfolio is the right way to think about it.

Which reflects the raising of the subordinated notes and the redemption of our remaining preference securities.

Our capital position provides increased flexibility as we look ahead.

Within the insurance segment this rate would be closer to the mid thirties.

Including as we approach the interest rate reset for a junior subordinated notes in April 2026.

The reinsurance segment it would be closer to the 50 <unk>.

To give some further context around our key natural peril exposure.

Another important part of our capital management strategy is outwards reinsurance and we're constantly optimizing our purchasing program.

Our one in 100 windstorm clash for South East Gulf and Caribbean.

And our one in 250, California earthquake P&L.

As Dan noted, we sponsored a new cat bonds under our Hermie re program during the quarter.

Are both less than 10% of shareholders' equity.

Which resulted in a slight increase in our ceded premium written.

Excluding a OCI.

In conclusion.

For the full year, we continue to estimate that a 40% session rate across our entire portfolio is the right way to think about it.

We remain confident in our business and the strength of our portfolio.

We are well capitalized and committed to deploying capital to accretive opportunities that maximize shareholder value.

Within the insurance segment this rate would be close to the mid thirties, while in the reinsurance segment it would be closer to the fifties.

I will now turn it back to Dan for additional remarks.

To give some further context around our key natural peril exposure.

Thank you Alan looking ahead, our focus remains on striking the optimal balance between underwriting great. Another strategic uses of capital.

Our one in 100 windstorm clash for South East Gulf and Caribbean.

I mentioned earlier, we believe share repurchases are highly accretive use of capital right now given the considerable discounts so on net book value.

And our one and $2 50, California earthquake P M L.

Are both less than 10% of shareholders' equity.

Excluding a OCI.

The trading environment remains highly favorable on a nimble underwriting approach and leadership position across core lines means we are well positioned to optimize the portfolio and capitalize on the attractive risk reward opportunities.

In conclusion.

We remain confident in our business and the strength of our portfolio.

We are well capitalized and committed to deploying capital to accretive opportunities that maximize shareholder value.

We're price adequacy remained strong after years of compounded increases.

I will now turn it back to Dan for additional remarks.

Thank you Alan looking ahead.

Given the dynamics of the market on the other capital opportunities at current share price. We now expect underlying growth for the full year to be approximately 6% to 10%.

This remains a striking the optimal balance between underwriting Grace and other strategic uses of capital.

As I mentioned earlier, we believe share repurchases are highly accretive use of capital right now given the considerable discounts so on net book value.

In insurance, we take a holistic view of the market.

Targeting areas of grades to optimize margin.

We need to execute a disciplined approach in areas of increasing competition.

The trading environment remains highly favorable on a nimble underwriting approach leadership position across cool lines means we are well positioned to optimize the portfolio and capitalize on attractive risk reward opportunities where price adequacy remained strong after use of compounding increases.

For instance, simple 30 of credit we are seeing a strong pipeline of structured credit deals.

The buildup in activity as we head towards the end of the year.

In property, we continue to forecast high retention rates margin and profitability.

Given the dynamics of the market on the other capital opportunities on our current share price. We now expect underlying Greg for the full year by approximately 6% to 10%.

Supported by years of compounded rates increases our market differential on the strength and diversity of our distribution network.

We continue to take advantage of new business finance, the E&S market with strong pricing credentials.

In insurance, we take a holistic view of the market.

Areas of growth to optimize margin.

In marine the market stable and we continue to build a balanced portfolio by leveraging our capacity across sub classes and leaning into named marine construction opportunities.

Continue to execute a disciplined approach in areas of increasing competition.

For instance in portfolio credit, we are seeing a strong pipeline of structured credit deals.

And in aviation, while we are beginning to see signs of some pricing adjustments in the recent time with.

The buildup in activity as we head towards the end of the year.

With single digit rate increases, we are not willing to compromise on our underwriting discipline and will continue to deploy capacity and more accretive ways until we see signs of sustained improvement.

<unk>, we continue to forecast high retention rates margin and profitability.

Supported by years of compounded rates increases our market differential on the strength and diversity of our distribution networks.

In reinsurance.

We continued to take advantage of new business signings VNS market with strong pricing credentials.

But the majority of premiums written for the year, we continue to optimize the portfolio with a focus on top tier clients and as mentioned earlier, we remain focused on managing exposures in lined with appetite we've targeted deployments on the Houston outward reinsurance.

In marine the market stable and we continue to build a balanced portfolio by leveraging our capacity across sub classes and leaning into new marine construction opportunities.

Seven one we saw a number of loss impacted California wildfire opportunities with compelling price increases.

And in aviation, while we were beginning to see signs of some pricing adjustments in the or with.

With single digit rate increases, we are not willing to compromise on our underwriting discipline and will continue to deploy capacity in more accretive ways until we see signs of sustained improvement.

This loss pricing supports an overall positive opioid with better pricing in the U S and flatter protein internationally.

As we look ahead, our focus is now on the remainder of the year on the U S wind season, which will determine the trajectory of the market into 2026.

In reinsurance.

With the majority of premiums written for the year, we continue to optimize the portfolio with a focus on top tier clients and as mentioned earlier, we remain focused on managing exposures in line with Opex, what we've targeted deployments on the Houston outwards reinsurance.

In summary, I'd like to leave you with a few key points.

<unk> actually made policy uncertainty associated with Russia, Ukraine litigation, we expect to unlock compelling growth opportunities moving forward.

We have unwavering confidence in the business, we have built and we are actively managing our portfolio to take advantage of profitable opportunities in what remains.

Seven one we saw a number of loss impacted California wildfire opportunities with compelling price increases.

Gross loss pricing supports an overall positive appealing with better pricing in the U S and flatter protein internationally.

It's a trading environment are market leaders.

This includes continuing to actually be cultivating a pipeline of new third party partnerships, which will be accretive to our overall underwriting strategy and finally, we are leveraging our agility and strong capital position to prioritize expanding capital management initiatives to maximize shareholder value.

As we look ahead, our focus is now on the remainder of the year on the U S wind season, which will determine the trajectory of the market into 2026.

In summary, I would like to leave you with a few key points.

<unk> actually made policy uncertainty associated with Russia, Ukraine litigation, we expect to unlock compelling growth opportunities moving forward.

As we move forward, we are excited to demonstrate the strength of our business on our ability to outperform through the cycle as we unlock new opportunities to capitalize on the current market dislocation and deliver superior returns to our shareholders.

We have unwavering confidence in our business, we have built and we are.

Simply managing our portfolio to take advantage of profitable opportunities in what remains an attractive trading environment are market leaders.

That operator, we will now open it up for questions.

This includes continuing to actually be cultivating a pipeline of new sales policy pumps ships, which will be accretive to our overall underwriting strategy and finally, we are leveraging our agility and strong capital position to prioritize expanding capital management initiatives to maximize shareholder value.

Okay.

Thanks.

Thank you.

We will now begin the question answer session.

If you would like to ask a question. Please press star followed by the number one on your telephone keypad.

If for any reason you would like to meet that question. Please press star followed by the number came.

As we move forward, we are excited to demonstrate the strength of our business on our ability to outperform through the cycle as we unlock new opportunities capitalize on the current market dislocation and deliver superior returns to our shareholders.

And again to ask a question. Please press Star then one.

Just as a reminder, if you are using a speaker phone. Please remember did pick up your handset before asking your question before.

Before we take our questions I would like to cleanly ask everyone to please limit your questions to one primary question along with a single follow up.

That operator, we will now open it up for questions.

If you have any further questions.

Thanks.

Thank you.

Please rejoin the queue.

We will now begin the question answer session.

Yeah.

Okay.

If you would like to ask a question. Please press star followed by the number one on your telephone keypad.

Yeah.

The first question. We have lived that comes from Meyer Shields in K B W. Please go ahead.

If any reason you would not to repeat that question. Please press star followed by the number came.

And again to ask a question. Please press Star then one.

Great. Thanks, so much and good morning, Ben you mentioned that this year's <unk> season to determine the trajectory of our.

Just as a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.

Probably got pricing going forward and I get that as a concept, but I'm wondering.

Before we take questions.

I would like to kindly ask everyone to please limit your questions to one primary question along with a single follow up if.

More specifically since California, wildfires didn't seem to have an impact on pricing.

If you have any further questions. Please rejoin the queue.

Outside of California.

What sort of loss or losses in Florida or in the southeastern United States from wind season, do you think it would take to impact overall property cat pricing for next year.

Yeah.

Okay.

Yeah.

The first question. We have lived that comes from Meyer Shields in K B W. Please go ahead.

Yeah, Thanks, Mike and I think not really has been.

Great. Thanks, so much and good morning, Ben you mentioned that this year's wind season to determine the trajectory of.

A path that we've seen it in recent months actually we've seen a year ago, a decent size loss would affect the whole market. We haven't seen that we've just seen that California board prices.

Probably got pricing going forward.

I get that as a concept, but I'm wondering.

With anybody a movement I would say, it's really a matter of a capsule event.

More specifically since California's wildfires didn't seem to have an impact on pricing.

It's really going to change the market something that really hits capital and potentially rising I think for US never go well managed portfolio.

Outside of California.

What sort of loss or losses in Florida or in the southeastern United States from wind season, do you think it would take to impact overall property cat pricing for next year.

You serve outwards reinsurance, which talks a little bit about some of our key P&L. So we think we're well positioned I think it's really a capital event.

Yeah. Thanks, Mike I think that really has been.

Okay. Thanks, and just switching gears a little bit was hoping you could talk about maybe demand for political risks there and cover just like that and how that compares to recent years.

A path that we've seen it in reasonable sector has seen a years ago adjacent signpost would affect the whole market. We haven't seen that we've just seen that California board prices.

Yeah. Thanks, So I think in a way.

We have.

Anyway, the movement I would say, it's really about the capsule event.

I've been trading in the political risk are.

And that kind of bespoke products for the best part of 10 years now have an incredibly good loss ratio in the low seventies. So it's been a very profitable business. It's a very innovative very high barriers to entry I think what we've seen now with 43 caveats.

It's really going to change the market something that really hits capital and potentially pricing I think for US never go well managed portfolio were a big user of outwards reinsurance, which what was a little bit about some of our key payer models that we think we're well positioned I think it's really a capital event.

That's you know theres been an uptick in the underlying.

Okay. Thanks, and just switching gears a little bit I was hoping you could talk about maybe demand for political risks there and cover just like that.

Deal activity I don't remember, what we're looking at protections that facilitate the underlying transactions as a capsule related to solvency margin and we're just seeing a bigger pipeline. The key thing is to pick the managers of those onto Paul underlying portfolios managed geopolitical risk managed macroeconomics.

How that compares to recent years.

Yeah. Thanks, I think I think you know we.

I've been trading in the political risk.

Bespoke products for the best part of 10 years now have an incredibly good loss ratio in the low seventies. So it's been a very profitable business.

<unk>.

I mean 10 years, we've been through <unk>.

We've been through various issues that have affected the market and it's been a very profitable line of business for us. So we have seen two things you got new customers coming to us.

<unk> very high barriers to entry I think what we've seen now we're fully through Covid.

It is exciting something.

It shows that we can add value to clients, but also repeat customers.

That's you know theres been an uptick in the underlying kind of deal activity I remember, what we're looking at protections that facilitate the underlying transactions.

It shows that they're very happy with the service that we're providing.

It's an exciting area for us strong pipeline as you know.

So I know you've just solvency margins are we just seeing a bigger pipeline. The key thing is to pick the managers of those zones underlying portfolios.

I wonder if they always tend to see it up so you can actually see Q3 Q4.

So we're building that pipeline back.

Geopolitical risks manage macroeconomic issues.

Chase with what we're seeing so Paul.

10 years, we've been through <unk>.

Great. Thank you very much.

Iman: We recognized favorable reserve development across the book, including better-than-expected loss emergence in our property line of business. We continued to have net favorable development in the Reinsurance segment, which was $24 million in the quarter, driven by positive development on prior-year catastrophe losses and benign prior-year attritional experience. Turning to expenses, policy acquisition expenses from third parties were 31.4 points of the combined ratio for the second quarter, compared with 28.4 points in the prior year period. While we may see movements quarter to quarter, policy acquisition expenses are in line with expectations, and we continue to anticipate our annual policy acquisition expense ratio to be in the low 30s and in the mid-20s in the insurance and Reinsurance segments respectively, in line with our half-year results of 30.6% in insurance and 23.4% in Reinsurance.

We've been through various issues that are affecting the market and it's been a very profitable line of business for us. So we have seen two things in that new customers coming to us.

Thank you.

Your next question comes from Leon Cooperman with Omega Your line is open.

Yeah.

Which is exciting because I think.

Congratulations on your results.

That shows that we can add value to clients, but also repeat customers, which shows that they're very happy with the service that we're providing.

I need a little help in my analysis.

Sure it's expert.

The company has done a seemingly excellent job in careful management and risk management.

It's an exciting area for us strong pipeline.

As a result in a company that's selling at a discounted valuation relative to its peers.

No.

It was 10-C C. You announced you can actually see Q3 Q4.

Checking around the street seems there unusual structure is probably responsible for.

So we're building that pipeline back we're very intrigued with what we're seeing so far.

You create issue and the California, wildfires, which are behind us.

Yeah.

Great. Thank you very much.

Yeah.

Thank you.

Your book value, we've been able to rise throughout the period of divorces, which is impressive.

Your next question comes from Leo and keep them in with Amy Guy Your line is open.

How do you explain your discount valuation.

Due to the structure.

Congratulations on your results.

I know, Richard Brenda and he's done an outstanding job and he's a good team.

So I need a little help in my analysis.

Sure it's expert.

Why do we showed a discount valuation.

The company has done a seemingly excellent job in careful management and risk management.

Yeah. Thanks, Thanks, Jay and we completely agree with our stock's undervalued at the time I was just just to highlight the performance second slushy claims for the quarter, we would've been in the mid seventies.

As a result of the company so they get a discount valuation relative to its peers.

Iman: The Fidelis Partnerships Commissions accounted for 13.1 points of the combined ratio for the quarter, compared to 15.0 points in the second quarter of 2024. There was no profit commission accrued in the quarter, as the underwriting profits did not meet the required hurdle. Finally, our general and administrative expenses were $22 million versus $24 million in the second quarter of 2024. The decrease in expense was driven by lower variable compensation accrued in the quarter. Moving on to our investment results, our net investment income for the quarter was $45 million, compared to $46 million in the prior year period. In addition to our net investment income, we had net unrealized gains on other investments of $5 million as a result of our strategic deployment of assets into a diversified hedge fund portfolio at the end of 2024.

And it took me around the street it seems they're unusual structure is partly responsible.

Even if we look at Q1 with Washington, Prime sorry, with Volta is not especially probably we'd be ahead of plan.

You create issue and the California, wildfires, which are behind us.

The results are exceptional I remember that you know that business well, she probably was written prequalification.

Yes.

Your book value, we've been able to rise throughout the period of divorces, which is impressive.

That gives us a lot of confidence and trading environment, but how are you going to chip a built in China.

How do you explain it just kept valuation.

Due to the structure.

I'd say, no Richard Brenda and he's done an outstanding job and easy.

Cherish diversified is optimized for these highly profitable.

Go ahead with your team.

I think maybe I'll now we're in a really strong position to buy back stock.

What are we showed a discount valuation.

Yeah. Thanks, Thanks Jay.

Because we do think we're on the valuation when you look at performance. It really indicates that the structure is working exactly as intended.

He agreed our stopes antibodies at a time.

Just to highlight the performance ex fleshy claims for the quarter, we would've been in the mid seventies.

On the English portfolio that correction Alpha and I think one of the best combined ratios X plus you can find in the market.

If we look at Q1 with Washington, Prime I'm, sorry, with volatile and it's not extra she probably we'd be ahead of plan.

So exceptional I remember you know that business well she claim was written pre bifurcation.

So we.

We have great. We're on Nevada. It allows us to take advantage of that dislocation alright, bancshares expand the share repurchase probably problems are not create immediate value. So what we'll do is to continue to focus on performance, we think that alone the trade down in the business.

Iman: This portfolio now represents approximately 5% of our total investable assets and is part of our ongoing strategy to generate superior risk-adjusted, diversified investment returns and enhance shareholder value. As of June 30, the average rating of our fixed income securities remains very high at A+, with a book yield of 5.0%, reflecting the steps we have already taken to optimize our portfolio. Average duration remains consistent with year-end at 2.8 years. Turning to tax, our effective tax rate for the first half of the year was 18.9%, compared to 14.6% in the first half of 2024. This rate reflects a greater proportion of pre-tax income generated in higher tax rate jurisdictions. In the full year, we expect our effective tax rate to remain in the 19% range, given the expected mix of profits and losses across the three countries.

It gives us a lot of confidence not only.

Trading environment, but how you know the chip they build in the portfolio.

It's maturities diversifying is optimized for these highly profitable.

I think when we all know we're in a really strong position to buy back stock.

You're absolutely right it should be trading above book, we can run it.

Because we've taken we're undervalued when you look at performance it really indicates that the structure is working exactly as intended.

It does create an opportunity to buy back stock, but I think the structure works exactly as it should be working we match the right catheter into the right risk by concentrating on the watching.

On the English portfolio that correction Alpha and I think one.

Yeah.

Not what post Brushy Canyon, we can draw a line under it.

One of the best combined ratio ex mushy trend in the market.

Unencumbered results will come through.

So.

It's in the market.

We have great. We're undervalued, but allows us to take advantage of that dislocation bancshares expand the share repurchase probably problem and not create immediate value. So what we'll do is continue to focus on performance. When you think of how long the tree cutting the business, but youre absolutely right it shouldn't be talking about.

I think you said you're familiar remarks that the.

As conditions.

Still reasonably strong in.

For the.

50% return of equity.

We have a reasonable expectation.

Sorry.

Wait lines that could you repeat the question.

In recent months it.

It does create an opportunity to buy back stock, but I think the structure works exactly as it should be working we match the right capex into the right risk by concentrating on the Roxane.

Yeah, I would say.

That 50% return on equity in this environment.

But the expectation is.

Yeah.

Iman: Looking at our capital management strategy, during the quarter, we executed a number of key actions. We recently announced a significant expansion of our capital management initiatives. We continued to return capital to shareholders through a combination of dividends and share buybacks. In the second quarter, we repurchased 5.5 million common shares for $88.7 million at an average price of $16.17 per common share. This includes 3.1 million common shares that were repurchased through a privately negotiated transaction with CVC, who remains one of our longstanding shareholders, having owned our shares since our founding. This brings our shares repurchased year to date to 6.9 million common shares at an average price of $16.01. That's approximately 73% of our current diluted book value per share, and that's highly accretive on both the book value and earnings per share basis to our shareholders.

Now what post Rushee pie and we can draw a line under it and that's I understand unencumbered results will come through improvements in the market.

Yeah. Thanks, So I think.

Yeah.

The performance Slushy crime I'm going to keep emphasizing that point that says to us that we can be really confident in the online underlying book market environment.

I think you said you're familiar remarks that the.

As conditions.

Still reasonably strong in.

I think based on all of those two factors current market dynamics opportunities to grow in the mature gene optimization of portfolio, we're really well positioned to deliver on all through the cycle topics.

For the.

50% return of equity.

There are reasonable expectations.

Sorry.

Could you repeat the question.

You know obviously, the second half of the year as determined by kind of activity. So it was a playful, but you know we manage that very well we've talked about <unk> P. M L.

Yeah, I would say that.

The 50% return on equity in this environment would be a reasonable expectation corridors, where superior service.

And the performance has been excellent. So yeah, we're confident we can deliver all necessary the market cycle targets.

Sure.

Yeah. Thanks.

I think.

Yes.

The performance Slushy crime I'm going to keep emphasizing that point that shows to watch that became a really confident in the online underlying book market environment.

Good luck, thank you very much.

Pretty much.

Okay.

Yeah.

Your next question comes from David and the Canadian with Evercore ISI. Please go ahead.

I think based on all of those two factors current market dynamics opportunities to grow in the mature gene optimization of portfolios, we're really well positioned to deliver on all three recycled topics.

Yeah.

Iman: Since the commencement of our share repurchase program in 2024, our strategic approach to share repurchases has provided $79 million to shareholders, or $0.73 to our book value per share. Additionally, last week we announced that our board approved a renewal of our repurchase authorization, given the strength of our balance sheet, which brings our total current authorization to $200 million. The board also approved an increase to our quarterly common dividend to $0.15 per share, bringing our dividend yield to 3.6%. Also, on the capital management front, we successfully completed a $400 million issuance of fixed-rate 30-year subordinated notes during the quarter. The offering was met with robust demand from our broad base of high-quality institutional investors, which we view as a clear vote of confidence in our balance sheet, our underwriting strategy, and long-term growth outlook.

Hey, Thanks. Good morning, Dan You had mentioned I think you had said that property DNF RPI was down slightly this quarter I'm wondering if you could just elaborate a little bit on where went to where it was last quarter and maybe talk about if you saw that continue.

Obviously, the second half of the year as determined by kind of that sort of thing. So it was a playful.

We manage that very well, we've talked about <unk> P. M L.

And the performance has been excellent. So yeah, we're confident we can deliver all necessary the market cycle targets.

Into July.

Yeah. Thanks, David Great question, and I don't think in a.

Good luck. Thank you very much thanks.

The sentiment in this earnings season has been.

Thanks very much.

Yeah.

You know that pricing has been a bit more challenging scenario, sending aviation, which we can talk about that later I think when we look at the Dana program. You know, we're a bunch of clients later, so that means we get a better pricing better rates better conditions, we built they spend time in the last five six years.

Yes.

Your next question comes from David and the Canadian with Evercore ISI. Please go ahead.

Yeah.

Hey, Thanks. Good morning, Dan You had mentioned I think you had said that property DNF RPI was down slightly this quarter I'm wondering if you could just elaborate a little bit on where went to where it was last quarter.

Chipotle is a compounding increases you know what.

When we think about loss ratios they've been in a knife foresee really profitable book of business margins are incredibly robust.

And maybe talk about if you saw that continue into July.

And I think you sort of differentiate between lasers and the subscription market.

Iman: Our debt-to-total capital ratio stands at 26.6%, which reflects the raising of the subordinated notes and the redemption of our remaining preference securities. Our capital position provides increased flexibility as we look ahead, including as we approach the interest rate reset for our junior subordinated notes in April 2026. Another important part of our capital management strategy is outward reinsurance, and we are constantly optimizing our purchasing program. As Dan Burrows noted, we sponsored a new cap bond under our Herby reprogram during the quarter, which resulted in a slight increase in our seeded premium written. For the full year, we continue to estimate that a 40% session rate across our entire portfolio is the right way to think about it. Within the insurance segment, this rate would be closer to the mid-30s, while in the Reinsurance segment, it would be closer to the 50s.

Yeah. Thanks, David Great question, and I don't think she and I sentiment in this earnings season has been.

The latest Oh, we wanted the bigger players in that market.

So maybe I'll turn on some business.

You know that pricing has been a bit more challenging scenario, sending aviation, which we can talk about that later I think when we look at the TNF program. You know, we're a bunch of clawing Slater.

But what we're doing is kind of reallocate capacity into different structures different errors of structures to maximize margin.

So that means we get a better pricing better rates better conditions. We built this book kind of in the last five six years multiple years, a compound increases you know what.

I know I'm going to follow the market down we're not prepared to do.

Right inadequately priced business.

So I think we are seeing high retention rates something around 90% for the year.

Do you think about loss ratios.

<unk> been in a knife foresee side really profitable book of business margins are incredibly robust.

We're very relevant points, which really gives us strength in terms of our distribution network and that's a real join us for success.

No I think you sort of differentiate between lasers and the subscription market.

I think we're seeing more of the same but we're also seeing new business coming in.

The lasers and.

One of the bigger players in that market.

And maybe I'll hang on some business.

Into the year that are out there pitching market some of the pricing there is actually an increase so I think what you'll see from US is finally basketball appeal excellent market number one because we're in Asia.

But what we're buying what you're doing is kind of reallocate capacity into different structures different hours of structures to maximize margin.

Yes, you'll see headline projects from brokers.

And I'll follow the market down we're not prepared to do.

People were very small lines.

Inadequately priced business.

Iman: To give some further context around our key natural peril exposure, our 1 in 100 windstorm class for Southeast Gulf and Caribbean and our 1 in 250 California earthquake PML are both less than 10% of shareholders' equity, excluding AOCI. In conclusion, we remain confident in our business and the strength of our portfolio. We are well capitalized and committed to deploying capital to accrete opportunities that maximize shareholder value. I will now turn it back to Dan Burrows for additional remarks.

Price takers not price makers.

So I think we are seeing high retention rates something around 90% for the year.

And well into the double digit.

Actions, we have we know that's happening not the same for later when you can cross sell that virtualized size, but it's certainly under a bit more pressure, it's going to be more difficult to break.

We're very proud of the venture breaks points, which really gives us strength in terms of our distribution network that some of you will join us for success.

I think we're seeing more of the same but we're also seeing in our new business coming in.

But we have a fantastic portfolio, that's been very very profitable.

Oh, they're fixing market some of the pricing there is actually an increase so I think what you'll see from US is finally basketball pls market number one because we are in Asia, and yes, youll see headline prices from brokers.

Got it understood and it is it is at Lloyds.

Syndicates that are being more competitive in and sort of impacting the market. There are just just as a follow up to what you were saying there earlier Chad.

People were very small lines.

Dan Burrows: Thanks, Iman. Looking ahead, our focus remains on striking the optimal balance between underwriting growth and other strategic uses of capital. As I mentioned earlier, we believe share repurchases are a highly accretive use of capital right now, given the considerable discounts to our net book value. The trading environment remains highly favorable on our nimble underwriting approach, and leadership position across core lines means we are well-positioned to optimize the portfolio and capitalize on attractive risk-reward opportunities, where price adequacy remains strong after years of compound increases. Given the dynamics of the market and the other capital opportunities at our current share price, we now expect underwriting growth for the full year to be approximately 6% to 10%. In insurance, we take a holistic view of the market, targeting areas of growth to optimize margin and continue to execute a disciplined approach in areas of increasing competition.

Price takers not price makers.

I think we've talked about this before.

People, who have smaller lifesciences and don't have the leverage he can't cross sell.

My name is a double digit.

Actions, we have we know that's happening not the same for Asia.

That joined the party a bit light and theyre already in the subscription world in that financing.

Cross sell and leverage from the life science, but it's certainly under a bit more pressure, it's going to be more difficult to break.

A much smaller percentage of the overall structural placement.

But we have a fantastic portfolio, that's been very very possible.

They're very competitive.

But when it went away and that wells and we're not following them down in today's short reductions because we don't operate in that space. So yes, it's more difficult.

Got it understood and it is it is it Lloyd's.

Syndicates that are being more competitive in and sort of impacting the market. There are just just as a follow up to what you were saying there earlier.

But then you know you have to ratchet leverage over that she ships I'm.

Well try expectation that we watch all of them to clients when they needed us.

I think we've talked about this before we know these people who have smaller life sciences and don't have the leverage.

Yeah.

Yeah.

Got it thanks.

And then I guess just for my follow up.

Cross sell.

I think last quarter, you had talked about timing of a renewal in the insurance segment that shifted from one Q to Q Q.

That joined the party a bit light and theyre already in the subscription world in that financing.

A much smaller percentage of the overall structural placement.

They're very competitive.

But when we're not in that world and we're not following them down in todays reductions because we don't operate in that space. So yes, it's more difficult.

Just wondering if we sort of normalized for that I think the growth was flat and maybe down a little bit in the insurance segment.

Dan Burrows: In asset-backed finance and portfolio credit, we are seeing a strong pipeline of structured credit deals, a build-up of activity as we head towards the end of the year. In property, we continue to forecast high retention rates, margin, and profitability. Supported by years of compound rate increases, our market differential, and the strength and diversity of our distribution network, we continue to take advantage of new business playing into the E&F market with strong pricing credentials. In marine, the market is stable, and we continue to build a balanced portfolio by leveraging our capacity across subclasses and leaning into new marine construction opportunities.

But then you know you have to ratchet leverage overnight she ships.

Is that sort of a good way to think about the growth or is there just more lumpiness and pipeline of ABF deals and stuff like that that might be coming here in the back half of year that'll get you up to yeah, the 6% to 10% for the full year.

Well my expectation that we watch all of them to clients when they needed us.

Yeah.

Yeah.

Got it thanks, and then I guess just for my follow up.

I think last quarter, you had talked about timing of a renewal in the insurance segment that shifted from <unk> to Q2.

Yes, that's a good question as you know.

It's one way to think about it.

I'll tell you I ask with others.

There is a movement between quarters.

You know just wondering if we sort of normalized for that I think the growth was flat and maybe down a little bit in the insurance segment.

Some of those specialty lines.

Yeah.

We don't think about it on a quarterly basis, we look at it across the year, we know it's going to renege.

Dan Burrows: In aviation, while we are beginning to see signs of some pricing adjustments in the all-risk sector with single-digit rate increases, we are not willing to compromise on our underwriting discipline, and we will continue to deploy capacity in more accretive ways until we see signs of sustained improvement. In Reinsurance, with the majority of premiums now written for the year, we continue to optimize the portfolio with a focus on top-tier clients. As mentioned earlier, we remain focused on managing exposures in line with appetite through targeted deployments and the use of outwards reinsurance. At 7/1, we saw a number of loss-impacted California wildfire opportunities with compelling price increases. Post-loss pricing supports an overall positive RPI, with better pricing in the U.S. and flatter pricing internationally. As we look ahead, our focus is now on the remainder of the year and the U.S.

Is that.

Just moved from one section to another but I wouldn't read too much into that.

Sort of a good way to think about the growth or is there just more lumpiness and pipeline of ABF deals and stuff like that that might be coming through in the back half of the year that'll get you up to.

I would say is just remember you know we are we.

We haven't optimized portfolio, but would note. Thanks, a lot of underpriced business.

I think.

Specifically in areas like aviation we've been disappointed.

The 6% to 10% for the full year, yes.

And the pricing given the loss activity in the law, so that I'd say bumps, but as I said, just beginning to see some green shoots in the OLED mobile should not say the answer to your question is we've got a strong pipeline. We're very comfortable that we can have all through the cycle targets.

Yes, that's a good question as you know.

It's one way to think about it.

Finally, I ask with others.

There is a movement between quarters.

Some of those specialty lines.

I think we got to think about it on a quarterly basis, we look at it across the year. We know it's going to renege. It just moved from one section to another but I wouldn't read too much into that.

Estimates.

Yeah.

Yeah.

Understood. Thank you.

Thanks, David.

I'd say just remember you know we all.

Yeah.

We haven't optimized portfolio, but would not scratch underpriced business and I think specifically in areas like aviation we've been disappointed in.

Yeah.

Your next question comes from how bad things with J P. Morgan Your line is open.

Dan Burrows: wind season, which will determine the trajectory of the market into 2026. In summary, I would like to leave you with a few key points. First, as we move past the uncertainty associated with the Russia-Ukraine litigation, we expect to unlock compelling growth opportunities moving forward. We have unwavering confidence in the business we have built, and we are actively managing our portfolio to take advantage of profitable opportunities in what remains an attractive trading environment for market leaders. This includes continuing to actively cultivate a pipeline of new third-party partnerships, which will be accretive to our overall underwriting strategy. Finally, we are leveraging our agility and strong capital position to prioritize and expand a set of capital management initiatives to maximize shareholder value.

Hi, Good morning, first question, you've been consistently really releasing property reserves like lots of other insurers, which you know I think sort of reflection of the strong pricing environment and so it must be a good underwriting.

And the pricing given the loss activity in the last sort of 18 months.

As I said, just beginning to see some green shoots in the overspend mobile should not say the answer to your question is we've got a strong pipeline. We're very comfortable that we can have all through the cycle targets.

That's how long it takes for Buffy you were supposed to go to Houston I know when you need it right, but maybe perhaps you can distinguish between the major Nike right like you know for property Cat I just wanted to get some sense of you know potentially down the line.

<unk> estimates.

Yeah.

Yeah.

Understood. Thank you.

Hi, Bob Hotel.

Thanks, David.

Alright, and then I'll pass over to Gianni If I understand your question, you're asking about you know our reinsurance segment and our CAC.

Yeah.

Yeah.

Your next question comes from how bad things with J P. Morgan Your line is open.

Positive prior year development.

Yeah that that book is performing extremely well and positive prior year development in the quarter of $24 million.

Hi, Good morning, first question, you've been consistently releasing property reserves like lots of other insurers, which you know I think sort of inflection up a strong pricing environment as opposed to a good underwriting.

Both on prior cats, and an attritional type experience in the reinsurance segment.

Give us a sense of how long it takes for Buffy you were supposed to go to Houston I know what their short dated right, but maybe perhaps it's been I guess distinguish we're going to make I think you're right like you announced a copy cats I just wanted to get some sense of you know potential down the line.

Dan Burrows: As we move forward, we are excited to demonstrate the strength of our business and our ability to outperform through the cycle as we unlock new opportunities, capitalize on the current market dislocation, and deliver superior returns to our shareholders. With that, operator, we will now open it for questions.

And.

You know, we don't forecast prior to that I mean, we book.

Because we see the results coming through in that segment, you certainly see the results coming through quite quickly.

Classroom Regina for any further comment.

Hi, Bob It's Alan I'll.

And then I'll pass over to Gianni if I understand your question, you're asking about you know our reinsurance segment and our CAC.

I didn't need to open up this apologies if it didn't why are you aiming and let me know, but it is a short tail rights are all probably is about him. It's more driven by the loss experience we get so it claims coming through nickel over an absence of claims in the quarter is not really driven by us moving assumptions around making changes to methodology.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star, followed by the number one on your telephone keypad. If for any reason you would like to remove that question, please press star, followed by the number two. To ask a question, please press star and one. Just as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. Before we take our questions, I would like to kindly ask everyone to please limit your questions to one primary question along with a single follow-up. If you have any further questions, please rejoin the queue. The first question we have comes from Maya Shields with KBW. Please go ahead.

Positive prior year development.

Yes that that book is performing extremely well and positive prior year development in the quarter of $24 million.

On prior cats, and an attritional type experience in the reinsurance segment and.

Actually if you think about the consistent P Y D C.

Across reinsurance and across our Attritional experience more generally over the past couple of years, that's really the assumptions are happy staying more in Vietnam launching at the end of the year than the claims do you see coming through in the following year and that's what's generated it.

You know, we don't forecast prior to that I mean, we book book as we see the results coming through in that segment, you certainly see the results coming through quite quickly.

I'll pass it over to China for any further comment.

Cities.

We didn't plan for any P. Why do you think you'd be look consistent news come through in the in the past couple of years.

Due to our public policies division, where are you aiming and let me know, but it is a short tail rights are all probably it's about him. It's more driven by the loss experience, we get claims coming through nickel over an absence of claims in the quarter is not really driven by us moving assumptions around making changes to methodology.

Yeah.

The.

Second question, maybe for Adam There was a comment in the press release about the bid estimate of outward reinsurance recoveries can you talk about that for a bit.

If you think about the consistent T Y D V C.

Yeah, I can take that one as well publish its Tony here.

Across reinsurance and across our Attritional experience more generally over the past couple of years, that's really the assumptions are happy staying more margin at the end of the year than the claims you see coming through in the following year and that's what's generated.

So there was a reallocation of recoveries in the quarter, so recoveries coming out of the reinsurance, but I think going into specialty there's nobody who impact here from a P&L from that and actually the number is relatively small in the context of our April recoveries in 2025.

Maya Shields: Great, thanks for mentioning. Good morning. Dan, you mentioned that this year's wind season could determine the trajectory of property cap pricing going forward. I get that as a concept, but I am wondering maybe more specifically, since California's wildfires didn't seem to have an impact on pricing outside of California, what sort of loss or losses in Florida or in the Southeastern United States from wind season do you think it would take to impact overall property cap pricing for next year?

So.

The reason, we get any reallocation, it's always been somewhere outwards programs would cover multiple classes of business.

Although we didn't plan for any P. Why do you think you'd be look consistent news come through in the in the past couple of years.

Yeah.

Operating on an aggregate basis and they could actually cover multiple events from different accident years. So you can have 24 X did your events and twenty-five ex figure events going into the same cover whether that generates a recovery. We then allocate that back out to the underlying events. So you can have some movement.

<unk>.

Got it.

Second question, maybe for Alan There was a comment in the press release about an updated estimate of outward reinsurance recoveries can you talk about that for a bit.

Yeah, I can take that one as well as joining here.

Dan Burrows: Yeah, thanks, Maya. I think that really has been a part that we've seen in recent loss activity. Years ago, a decent size loss would affect the whole market, and we haven't seen that. We've just seen California wildfires without any real movement. I would say it's really about a capital event. That's what's really going to change the market, something that really hits capital and potentially rating. I think for us, we've got a well-managed portfolio. We're a big user of outward reinsurance. We talked a little bit about some of our key PMLs, so we think we're well positioned, but I think it's really a capital event.

And whether recovery split if the underlying losses in particular.

So there was a reallocation of recoveries in the quarter, so recoveries coming out of the reinsurance, but I think going into specialty because nobody will impact the overall P&L from that and actually the number is relatively small in the context of our April recoveries in 2020 five.

<unk> segment.

Various other changes that could happen there.

You get most of that would come through the first quarter. After a big event I E. Q2. This year. So it's not really something I'd expect to see in the future.

The reason, we get any reallocation, it's always been somewhere outwards programs would cover multiple classes of business.

And I think it's important to note that over what our estimate for Cal wildfires, which is the main kind of <expletive> is actually come down slightly.

Operating on an aggregate basis and they could actually cover multiple events from different accident years. So you can have 24 X did your events and twenty-five ex did you events going into the same cover whether that generates a recovery. We then allocate that back out to the underlying events. So you can have some movement.

Over the quarter when you look at the some between the cheapest.

Alright, thank you.

Thank you Pablo we now have Mike.

And whether recovery split if the underlying losses moves in particular, if they move between segments.

And ski with BMO. Please go ahead.

Maya Shields: Okay, thanks. Switching gears a little bit, I was hoping to talk about maybe demand for political risk, terror, and coverages like that, and how that compares to recent years.

Yeah.

Hey, Thanks, Good morning, I wanted to follow up I think an important point.

So the changes that can happen.

Now you get most of that would come through the first quarter. After a big event I E. Q2. This year. So it's not really something unexpected to see in the future.

Point.

You are making about your RPI or pricing levels being being down less than the market and I think you've quantified flat to up 10% in certain property lines, because I believe you're a leader on the syndicate and I think you mentioned cross sellers is what you what what's causing that so I'm just kind of maybe it's too technical but I'm trying to understand.

Dan Burrows: Yeah, thanks. I think, you know, we have been trading in the political risk and that kind of Bespoke product for the best part of 10 years now. We have an incredibly good loss ratio in the low 30s, so it's been a very profitable business, but it's a very innovative, very high barriers to entry. I think what we've seen now, we're fully through COVID, that's, you know, there's been an uptick in underlying, you know, kind of deal activity. Remember, what we're looking at are protections that facilitate the underlying transactions, you know, for capital and the solvency margin, and we're just in a bigger pipeline. The key thing is to pick the managers of those underlying portfolios that manage geopolitical risk, that manage macroeconomic issues. You know, in that 10 years, we've been through COVID.

And I think it's important to note that over what our estimate for Cal wildfires, which used to make this shift has actually come down slightly.

Over the quarter when you look at the some between the Zip codes.

Alright, thank you.

Hum how that works or you are you, saying that the actual pricing that.

Thank you Pablo we now have Mike Zaremski with BMO. Please go ahead.

That you know you all receive is better than the rest of the folks to listen because it's like you're writing other spines of business or are you taking into account you know other lines of business Youre, writing that that's getting better pricing or maybe you can just can kind of elaborate on the technicalities of how this works.

Yeah.

Hey, Thanks, Good morning, I wanted to follow up I think on the important point.

Point.

You are making about your RPI or pricing levels being being down less than the market and I think you've quantified flat to up 10% in certain property lines, because I believe you're a leader on the syndicate and I think you mentioned cross sellers is what you what what's causing that so I'm just trying to maybe it's too technical but I'm trying to understand.

Yeah. Thanks, a lot I think firstly, you could differentiate between the syndicate.

Punish the partnership on the writing their syndication fairly small Paul.

The April.

Dan Burrows: We've been through various issues that have affected the market, and it's been a very profitable line of business for us. We have seen two things, you know, new customers coming to us, which is exciting, because I think that shows that we can add value to clients, but also repeat customers, which shows that they're very happy with the service that we're providing. It's an exciting area for us, strong pipeline. As you know, a lot of those deals tend to see an uptick in activity Q3, Q4. We're building that pipeline, but you know, we're very pleased with what we're seeing so far.

And so the lease position he has really held within the partnership.

Hey, Dan can I think really builds to poke tiny I bought from 2000 1919.

Hum how that works or you are you, saying that the actual pricing that.

So when you think about.

That you know you all receive is better than the rest of the folks to listen because it's like you're writing other spine as a business or are you taking into account you know other lines of business Youre, writing that that's getting better pricing or maybe just can kind of just elaborate on the technicalities of how this works.

The daily underwriting so of course that we have seen it maybe two or three times a day all nice cohorts at certain points you might be selling them Tara.

Tara casualty property and being able to leverage across those three four maybe even five is no.

Yeah, Thanks, well I think firstly, you could differentiate between the syndicate.

Different class Cross Pos offerings gives you a differentiated position.

The partnership on the writing this indicates a fairly small.

That's the first thing.

Maya Shields: Great, thank you very much.

Specifically, what do you think about the syndicate.

Hum.

And so the lead position he's really held within the partnership.

Operator: Thank you. Your next question comes from Leon Cooperman with Omega Advisors. Your line is open, Leon.

More of a primary underwriter as you are.

Dan is there because it really builds to pull back.

Yeah, we did take a 20% variable quite a share. So we don't really participate in that and but at the syndicate or offering a property lines and it helps us leverage the access play that we've got so that's that's purely for the syndicate, but it also translates back into the the bigger portfolio wishes with a partnership where we can use.

From 2000 1990.

Leon Cooperman: Congratulations on your results. I need a little help in my analysis, as I am not an insurance expert. The company has done a seemingly excellent job in capital management and risk management, which has resulted in a company that is selling at a discount valuation relative to its peers. In checking around the street, it seems that our unusual structure is partly responsible, plus the Ukraine issue and the California wildfires, which are behind us. Your book value has been able to rise throughout that period of losses, which is impressive. How do you explain your discount valuation? Is it due to the structure? I know Richard Brindle, and he has done an outstanding job. He is a good guy that has your team. Why are we selling at a discount valuation?

When you think about it.

Daily underwriting so close that we havent seen it maybe two or three times a day all nice cool cities, okay certain clients he might be selling them Terra casualty property and being able to leverage across phase three four maybe even five.

And in France as well.

It's leveraging you know how you deploy on a particular deal.

In a different class.

Leveraging your relationships with brokers and clients and it's leveraging the fact that you are selling multi class products for those clients.

POS offerings gives you a differentiated position so that's the first thing.

Specifically when you think about the syndicate.

And you're making the price you will the price nightcap nice deals, it's a very different outcome than actually just being a subscription market. After a couple of billion dollars at the end, particularly.

More of a primary underwriter as you.

No no we didn't take a 20% payable quota share. So we don't really participate in that and but as the syndicate or offering a property lines and it helps us leverage the access play that we've got so that's that's purely for the syndicate, but it also translates back into the the bigger portfolio, which is with the partnership where they can use.

Yeah.

Okay, that's very helpful.

And my my follow up.

Dan Burrows: Yeah, thanks, Jay. We completely agree that our stock is undervalued at the time. To highlight the performance ex-Russia-Ukraine for the quarter, we would have been in the mid-70s. Even if we look at Q1 with wildfires and that ex-Russia-Ukraine, we would be ahead of plan. So the results are exceptional. Remember that that business, Russia-Ukraine, was written pre-bifurcation. That gives us a lot of confidence, not only in the trading environment, but how the TFP are building the portfolio. It is mature, it is diversified, it is optimized, but it is highly profitable. So where we are now, we are in a really strong position to buy back stock because we do think we are undervalued. When you look at performance, it really indicates that the structure is working exactly as intended. They are focusing on the inwards portfolio. They are creating alpha.

The prepared remarks I believe.

And in France as well.

Maybe Dan set that.

Leveraging how you deploy on a particular deal.

<unk> are under 10% of equity for certain events. It out one in 101 or 250.

Leveraging our relationships with brokers and clients and it's leveraging the fact that you are selling multi class products for those clients.

Is there a could you offer a rough corresponding industry loss for those events like a one in 100 Mena.

And you're making the price you will the price nightcap nice deals, it's a very different outcome than actually just being a subscription market. After a couple of billion dollars at the end, particularly.

$30 billion event.

But if you could help us with that.

Hi, Mike It's Alan.

Yeah.

Yeah, we don't really think about the industry loss again. This is a ground up model, where we worked through our P&L based on.

Okay, that's very helpful.

And my my follow up.

The prepared remarks I believe.

That might have been down set that.

Various metrics it is a bigger prize market that we participate in and discuss so it really is not based on industry losses is based on our portfolio.

<unk> are under 10% of equity for certain events at our one in 100 to one or 250.

Dan Burrows: We have got one of the best combined ratios ex-Russia-Ukraine in the market. So we agree we are undervalued, but it allows us to take advantage of that bifurcation, buy back shares, expand the share repurchase program, and that creates immediate value. What we will do is to continue to focus on performance. We think that along luck that we are going into business. You are absolutely right, Lee. It should be trading above book. We think we are undervalued. It does create an opportunity to buy back stock. I think the structure works exactly as it should be working. We match the right capital to the right risk. They concentrate on the underwriting. Now we are post-Russia-Ukraine. We can draw a line under it. Those unencumbered results will come through and prove it to the market.

Is there a could you offer a rough corresponding industry loss for those events like the one in 100 meter.

And it's again, it's driven by downtime ground up analysis for those particular, two key natural perils, yeah, It's Tony here and it really varies by Paradise, well. If you think about the wildfires that was probably 40 to 50 billion dollar loss I'm, taking various points from the market.

$30 billion event.

But if you could help us with that.

Hi, Mike It's Alan.

Some people would have thought on the wildfire model. The one in 500 for example, but obviously if you go a 40 or $50 billion of wind blows into Florida that would be I'm not sure. It's I'm curious in that so it's quite difficult to assign a industry loss.

Yeah, we don't really think about the industry's off again. This is a ground up model, where we worked through our P&L based on.

Various metrics. It is a vertical is market that we participate in is discuss so it really is not based on industry losses is based on our portfolio and it's again, it's driven by downtime ground up analysis for those particular, two key natural perils, yes, its Tony here and it really varies by.

To any particular time, it's you really need to think about the apparel and think about your own view of risk around that at the same time as well.

Yeah.

Yeah.

Okay got it yeah, I guess, yet I think prescribing and we appreciate why it's I think it's tougher sometimes investors too.

Leon Cooperman: I think you said in your formal remarks that the business conditions are still reasonably strong. I infer that the 50% return equity would not be a reasonable expectation.

Paradise Valley, if you think about the wildfires that was probably 40 to 50 billion dollar loss I'm, taking various points from the market and some people would have thought on the wildfire mobile one.

They're making good use of the <unk> P.

P M L.

The company has provided.

Appreciate that it's provided got it. Thank you so much.

500 for example, but obviously you've got a 40 or $50 billion of wind blocks into Florida that would be a much shorter time periods in that so it's quite difficult to assign a industry loss.

Thanks, Mike.

Dan Burrows: Sorry, Leo. We've got a weak line there. Could you repeat the question, please?

Thank you.

Now have Alex Scott with Barclays.

Leon Cooperman: I would say that the 50% return in equity in this environment would be a reasonable expectation, or is it very direct?

Your line is open.

Hi, Good morning, first one I have is just on some of the comments you made on aviation and the price adequacy, there and sort of the actions you're taking can you talk about.

To any particular time period, you really need to think about the payroll and think about your own view of risk around but at the same time as well.

Dan Burrows: Yeah, thanks. Look at the performance in ex-Russia, Ukraine. I am going to keep emphasizing that point. That shows to us that we can be really confident in the underlying book market environment. I think based on those two factors, current market dynamics, opportunities to grow, the maturity and optimization of the portfolio, we are really well positioned to deliver on our through-the-cycle targets. Obviously, the second half of the year is determined by cap activity. So it is also playful. We manage that very well. We have talked about our PMLs. The performance today has been excellent. So yeah, we are confident we can deliver on those through-the-market cycle targets.

Okay got it yeah, I guess, yet they are I think prescribing and we appreciate why it's I think it's tougher sometimes investors too.

Yeah.

What kind of impact do you expect that have to have a premium growth like how much of that has been completed already worse than maybe we need to consider that over the next 12 months and premium growth.

To make good use of the P&L.

P M L.

But the companies provide which we appreciate that it's provided got it. Thank you so much.

Yeah, I think win where it's going to be difficult to grabbing aviation unless we see those green shoots really.

Thanks, Mike.

Okay.

<unk> improved the pricing it just hasn't responded to the overall.

Thank you.

Now have Alex Scott with Barclays.

Your line is open.

The impacts of those losses that we've seen any over sector. You know when we think about what next year.

Hi, Good morning, first one I have is just on some of that come comments, you made on aviation and the price adequacy, there and sort of the actions you're taking can you talk about what.

So she crime, we've written over a billion dollars of premium with an 11% plus franchise. So we can lean in.

Given that there is.

Right adequacy and there's good margin in the business.

What kind of impact do you expect that have to have a premium growth like how much of that has been completed already Bruce yeah, maybe we need to consider that over the next 12 months and premium growth.

Leon Cooperman: Good luck. Thank you very much.

Dan Burrows: Thanks very much.

Okay, there's a lot of activity towards the end of the year, we're hopeful those green shoots.

Operator: Your next question comes from David Motonaden with Evercore ISI. Please go ahead.

And then the ability to write new business.

Yeah, I think win where it's going to be difficult to grabbing aviation, Let's me see those green shoots really.

At the moment, we're disappointed in that class of business.

Yeah.

David Motonaden: Hey, thanks. Good morning. Dan, you had mentioned, I think you had said that property DNF RPI was down slightly this quarter. I am wondering if you could just elaborate a little bit on where it went to where it was last quarter, and maybe talk about if you saw that continue into July.

Okay.

<unk> improved the pricing it just hasn't responded to the overall.

Alright.

The MDU Commission.

The impacts of those losses that we've seen any oversight Uh huh.

Keith could you talk about that a bit and just.

About what.

Washington Crown, we've written over $1 billion of premium within those.

I want to understand like how recent results for influence it is as.

Those franchises so we can lean in.

As we think through the next year or two particularly I think maybe the Russia, Ukraine sounded like it was from before that was set up. So you know what what are some of the things that have pressured combined ratios that will or won't sort of influenced that.

Given that there is.

Dan Burrows: Yeah, thanks, David. Great question. I do not think the sentiment in this earnings season has been that pricing has been a bit more challenging in certain areas, certainly aviation. We will speak and talk about that later. I think when we look at the DNF program, we are a verticalized leader. That means we get better pricing, better rates, better conditions. We have built this book over the last five, six years, multiple years of compound increases. When we think about loss ratios, they have been in the low 40s, so a really profitable book of business. Margins are incredibly robust. That said, I think you have got to differentiate between leaders and the subscription market. For leaders, and we are one of the bigger players in that market, we have been flat to maybe over 10 on some business.

Adequacy and there's good margin in the business.

I guess, there's a lot of activity towards the end of the year, we're hopeful those green shoots or results.

Let's see Suraj new business for us.

Yeah that level.

The moment, we're disappointed in that class of business.

Yeah, Thanks, Alex its Alan.

Okay.

Yeah.

The profit commission with the P. P is on a GAAP calendar year <unk>.

Yeah.

Okay.

Essentially there was some adjustments, but they are all sort of calendar and based on the financials you see in front of you.

Alright.

The MDU Commission.

Keith could you talk about that a bit and just.

So.

I want to understand like how recent results for influence it.

Again.

She would frame we.

We have said is behind us and as a result, you would think that in 2026, assuming underwriting performance continues to perform you mean.

As we think through the next year or two.

Particularly I think maybe the Russia, Ukraine. It sounded like it was from before that was set up. So you know what what are some of the things that have pressured combined ratios that will or won't sort of influenced that.

In the ranges that we've seen excluding Russia, Ukraine or would of course be a profit commission to the T. S. P. A R. Our interests are aligned with T. S. P. N that again, they're going to write profitable business and once they meet the hurdle rate is based on calendar year results for that year.

Dan Burrows: What we are able to do is kind of reallocate the capacity into different structures, different areas of structures to maximize the margin. We are not going to follow the market down. We are not prepared to write inadequately priced business. So I think we are seeing higher retention rates, something around 90% for the year. We are very relevant to our brokers and clients, which really gives us strength in terms of our distribution network. That is a real driver to our success. I think we are seeing more of the same, but we are also seeing new business coming in into the E&F out of the admitted market. Some of the pricing there is actually an increase. So I think what you will see from us is slightly better RPIs than market, number one, because we are a leader.

Yeah that level.

Yeah.

Yeah. Thanks, Alex It's Alan the profit Commission with the T. O P is on a GAAP calendar year numbers essentially there were some adjustments, but they are all sort of calendar and based on the financials you see in front of you.

There is a carryforward mechanism, but theres no loss to carry forward at this point because they've been around 100% combined ratio in total so it will not and it's a calendar year calculation.

So.

And so in 2020, six certainly, but even hopefully in 2025, it will be a profit commission, but its based on the actual calendar year underwriting results.

Again, Russia.

Russia Ukraine.

We have said is behind us and as a result, you would think that in 2026, assuming underwriting performance continues to perform and meet.

Yeah.

Yeah.

Got it thank you.

The ranges that we've seen excluding Russia, Ukraine or would of course be a profit commission to the Pip P. A R. Our interests are aligned with T. O P. N that again, they're going to write profitable business and once they meet the hurdle rate is based on calendar year results that year. There's there is a carryforward mechanism, but theres no loss carryforward at this point because it's been around 100.

Thank you just as a quick reminder, that to ask a question. Please press star followed by one on your kind of think he patching.

The next question comes from Rob Cox with Goldman Sachs. Please go ahead.

Dan Burrows: Yes, you will see headline prices from brokers, with people with very small lines, that are price takers, not price makers, in the relative double-digit productions. We know that is happening. Not the same for a leader, or you can cross-sell or leverage your line size. It is certainly under a bit more pressure. It is going to be more difficult to grow, but we have a fantastic portfolio that has been very, very profitable.

Hey, thanks.

I just wanted to ask on the tax rate guidance firstly.

Combined ratio in total so it will not and its calendar year calculation.

It seems like a step up from the mid teens guidance previously and I just wanted to understand if that's really all just distribution geographically of of income there and would you guys expect a similar rate in 2026 and beyond.

So in 2026, certainly, but even hopefully in 2025, there will be a profit commission, but its based on the actual calendar year underwriting results.

Yeah.

Got it thank you.

Thank you just as a quick reminder, that to ask a question. Please press star followed by one on your kind of think he patio.

Hi, Robyn it's Alan Thanks for the question are you you got to answer absolutely into 2025 on the tax accounting rules are you project to the end of the year do you think where do you think the profits will be in the three subsidiaries.

David Motonaden: Got it. Understood. Is it Lloyd's syndicates that are being more competitive and impacting the market there, just as a follow-up to what you were saying earlier?

Next question comes from Rob Cox with Goldman Sachs. Please go ahead.

We have one in the U K, when an iron and wine and for me that all have different.

Hey, thanks.

Dan Burrows: Yeah, I think we have talked about this before. You know, it is people who have smaller line sizes and do not have the leverage who cannot cross-sell. They join the party a bit late. They are really in the subscription world, and they are fighting over a much smaller percentage of the overall structural placement. Then they are very competitive, right? But we are not in that world, and we are not following them down into those sort of deductions because we do not operate in that space. So yes, it is more difficult. But then, you know, you have to leverage your relationships. We are well placed because, you know, we worked hard with the clients when they needed us.

Just wanted to ask on the tax rate guidance firstly.

Tax rates.

And right now I'm more of our profits are in our U K operation because at the beginning of the year and how California wildfires impacted.

It seems like a step up from the mid teens guidance previously and I just wanted to understand if that's really all just distribution geographically of of income there and would you guys expect a similar rate in 2026 and beyond.

Bermuda, especially.

So we do expect through the rest of the year it will be a 19% effective tax rate. It's too early to call for 2026, we're working through our planning process now and that's you know as with all of our peers. We will work through that in the next three months and then refined it posted wind season.

Yeah.

Hi, Robyn it's Alan Thanks for the question are you you got to answer absolutely into 2025 tax accounting rules are you project to the end of the year do you think where do you think the profits will be in the three subsidiaries that we have one in the UK when an iron and wine in Bermuda all have different <unk>.

At the time, when we have figured out where our business plan expectations are for 2026, and yeah, we understand which subsidiary that was falling will give you further updates on the tax rate for 2026.

Tax range.

And right now I'm more of our profits are in our U K operation.

David Motonaden: Got it. Thanks. I guess just for my follow-up, I think last quarter you had talked about timing of a renewal in the insurance segment that shifted from Q1 to Q2. Just wondering if we sort of normalized for that. I think the growth was flat and maybe down a little bit in the insurance segment. Is that sort of a good way to think about the growth, or is there just more lumpiness and pipeline of asset-backed finance deals and stuff like that that might be coming through in the back half of the year that will get you up to the 6% to 10% for the full year?

Yeah.

Because at the beginning of the year, and how California wildfires impacted.

Got it that's helpful. And then just a follow up on the.

Bermuda, especially.

New share repurchase authorization is there any way to think about how you might anticipate using that up and sort of a base case scenario.

So we do expect through the rest of the year it will be a 19% effective tax rate. It's too early to call for 2026, we're working through our planning process now and that's you know as with all of our peers, we'll work through that in the next three months and then refine it.

Yeah, It's Alan again.

Yeah, It's a multifactor approach again as we've stated previously we look at capital management in the hole and you want to use our capital to reinvest in the book first and foremost.

Wind season.

At the time when we have three of them were our business plan expectations are for 2026, and we understand which subsidiary that was falling will give you further updates on the tax rate for 2026.

And then we look at our outwards reinsurance program.

Both strategically and tactically what what are we doing there and then we look to return capital to shareholders. So theres no easy bullet answer to share buybacks. Obviously price is an important feature and Theyre undervalued right. We're trading at now.

Yeah.

Got it that's helpful. And then just a follow up on the.

Dan Burrows: Yeah, I mean, that's a good question, as you know. It's one way to think about it. In our portfolio, as with others, there is a movement between quarters, especially some of the Specialty lines. I think we don't think about it on that quarterly basis. We look at it across the year. We know it's going to renew. It just moved from one station into another. I wouldn't read too much into that. What I would say is just remember, we have an optimized portfolio, but we're not going to write underpriced business. I think, specifically in areas like aviation, we've been disappointed in the pricing given the loss activity in the last sort of 18 months. As I said, just beginning to see some green sheets in the all-risk sector, and we're watching that. The answer to your question is we've got a strong pipeline.

New share repurchase authorization is there any way to think about how you might anticipate using that up and sort of a base case scenario.

Certainly appealing, but it's it's a 200 million authorization that they can sit out there for up to two to three years.

Okay.

Yeah, It's Alan again.

Yeah, It's a multifactor approach again as we've stated previously we look at capital management in the hole and we want to use our capital to reinvest in our book first and foremost.

We will look at it on a measured basis based on our capital position and the other factors in here and I'm thinking that as I said that reinvesting in profitable opportunities and outward reinsurance. So I wish I could give you more strict guidance on that but we will certainly be that's.

And then we look at our outwards reinsurance program.

Both strategically and tactically what what are we doing there and then we look to return capital to shareholders. So theres no easy answer to share buybacks. Obviously price is an important feature undervalued right. We're trading at now it's certainly appealing, but it's it's a 200 million authorization.

At the current share price you can expect that.

We will do the right thing.

Yeah.

Thank you.

Dan Burrows: We're very comfortable that we can hit our through-the-cycle targets and hit our growth estimates.

We have another question from Andrew I understand with Jefferies. Please go ahead, when you're ready.

They can sit out there for up to two to three years.

We will look at it on a measured basis based on our capital position and the other factors are in our thinking.

David Motonaden: Understood. Thank you.

Hey, Thanks, maybe following up on tax I think theres been some discussion that there could potentially be offsetting credits to operating expenses in outer years or are you considering that in any future plant or hearing of that.

Dan Burrows: Thanks, David.

Thinking that as I said that reinvesting in profitable opportunities and how are you.

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

So I wish I could give you more strict guidance on that but we will certainly be at.

Maya Shields: Hi, good morning. First question, you have been consistently releasing property reserves like a lot of other insurers, which, I think is a reflection of the strong pricing environment as well as your good underwriting. Can you give us a sense of how long it takes for property reserves to fully heat? I know they are short-dated, right? Perhaps you could distinguish between the major lines you write, like DNF or property caps. I just want to get some sense of potential to release down the line.

At the current share price you can expect that.

Yeah, Yeah, Thanks, Alan again and.

We will do the right thing.

That's I believe you're referring to in Bermuda tax law and in the accounting World you can't really record any offsetting credits until the government actually passes tax law changes, we haven't seen those credits come through yet we are anxiously awaiting to see what will be but now right now we're not taking credit for those and we are not we're not predicting nose and when the legislation change me.

Yeah.

Yeah.

Thank you.

We have another question from Andrew I understand with Jefferies. Please go ahead, when you're ready.

Hey, Thanks, maybe following up on tax I think theres been some discussion that there could potentially be offsetting credits to operating expenses in outer years or are you considering that in any future plans are or hearing of that.

I'll put.

Alan: Hi, Pablo. I will start and then I will pass over to Johnny. If I understand your question, you are asking about our Reinsurance segment and our CAT, positive prior-year development. That book is performing extremely well. We had positive prior-year development in the quarter of $24 million, both on prior CATs and on attritional type experience in the Reinsurance segment. We do not forecast prior-year development. We book as we see the results coming through. In that segment, you certainly see the results coming through quite quickly. I will pass over to Johnny if you have any further comment.

Put that into the mix and that will affect our effective tax rates, but nothing is considered at this point.

Okay, and then on the asset backed finance and credit portfolio can you maybe talk about the sensitivity to interest rates, there either on the loss ratio or or or premium growth outlook.

Yeah, Yeah, Thanks, Alan again.

That's I believe you're referring to the Bermuda tax law and in the accounting World you can't really record any outstanding credits until the government actually passes tax law changes, we haven't seen those credits come through yet we are anxiously waiting to see what it will be but now right now we're not taking credit for those and we're not we're not predicting nose and when the legislation.

Yes, it's Tony here I'll take the the loss ratios I mean, obviously across that type of portfolio. It was trying to get diversification. So you wouldnt want exclusive exposure to interest rate, we'd be trying to balance geographically balanced amongst different economic factors as well to really build out a diversified portfolio.

We won't.

Put that into the mix and that will affect our effective tax rates, but nothing is considered at this point.

Obviously, when we price and do exploration managing on their we'd run a number of scenario based around sensitivities to a number of different economic variables to ensure that we're happy with the broad exposure. So I would say is thinking about things like that is really a core part of the portfolio and if you think about how it's been tested over time, we've seen a pretty severe shock on interest rates.

Dan Burrows: Yeah, I couldn't hear you too well, Pablo. So apologies if this isn't where you were aiming and let me know. As a short-tail writer, our prior-year development is more driven by the loss experience we get. Claims coming through in the quarter or an absence of claims in the quarter, it's not really driven by us moving assumptions around or making changes to methodology. So actually, if you think about the consistent EY lead we've seen across Reinsurance and across our attritional experience more generally over the past couple of years, that's really the assumptions have been setting more IBNR margin at the end of the year than the claims we actually see coming through in the following year, and that's what's generated it. Although we don't plan for any PYD, I think you'd be looking consistently as it's come through in the past couple of years.

Yeah.

Okay.

And then on the asset backed finance and credit portfolio can you maybe talk about the sensitivity to interest rates, there either on the loss ratio or or or premium growth outlook.

The last few years haven't seen any real material loss coming through from that tool in terms of other economic variables has been tested against I think Tobey. This is probably one of the biggest tests. It could've adult if you think about the full quite a bit that.

Yes, it's Tony here I'll take the the loss ratio.

Obviously across that type of portfolio. It was trying to get diversification. So you wouldnt want exclusive exposure to interest rate, we'd be trying to balance geographically balanced amongst different economic factors as well to really build out a diversified portfolio.

That would be that kind of scenario is the thing that would worry us on that book you know something that impacted the globe something that impacted a number of different variables at the same time. The book ex became too that extraordinarily well we had almost no loss of toll from Covid. It's in the looser in terms of loss ratio across the periods in aggregate. So I'd say, we're really comfortable with it.

Obviously, when we price them do exploration management on that we'd run a number of scenarios around sensitivities a number of different economic variables to ensure that we're happy with the broad exposure.

Maya Shields: No, that didn't sound. Second question, maybe for Alan. There was a comment in the press release about an updated estimate of outward Reinsurance recoveries. Can you talk about that for a bit?

I would say I'm speaking about things like that it's.

It's really a core part of the portfolio and if you think about how it's been tested over time, we've seen a pretty severe show an interest rate in the last few years I haven't seen any real material loss coming through from that tool in terms of other economic variables has been tested against I think Tobey. This is probably one of the biggest tests. It could've adult if you think about it.

The level of risk and the pricing adequacy in that cost as a whole yes. He's done here just to add to that I think the other thing that day underwriting pools, when we think about interest rates.

Dan Burrows: I can take that one as well, Pablo. It is Johnny here. There was a reallocation of recoveries in the quarter. Recoveries came out of the Reinsurance pillar and went into Specialty. There is no overall impact to the overall P&L from that. The number is relatively small in the context of our overall recoveries in 2025. The reason we get any reallocation at all is that some of our outward programs would cover multiple classes of business. They operate on an aggregate basis, and they could actually cover multiple events from different accident years. You can have 2024 accident year events and 2025 accident year events going into the same cover. When that generates a recovery, we then allocate that back out to the underlying event.

Tariffs the impact we're able to make adjustments in real time.

Now on a daily basis on the royalties are able to see.

Could be that kind of scenario is the thing that would worry us somehow you know something that impacted.

Reprice readjust their thoughts on how the deal should be struck shows every single day. So that's a really important difference for us that we can do that in real.

Something that impacted a number of different variables at the same time. The book ex became too that extraordinarily well we had almost no loss at all from Covid. It's in the looser in terms of loss ratio across the areas in aggregate. So I'd say, we're really comfortable with the level of risk and the pricing adequacy in that cost to go down here just to add.

Real time.

Yeah.

Yeah.

Thank you.

Yeah.

Yeah.

Thank you.

That does conclude the question and answer session today, and I'd like to turn call back to Tom Barrack for closing remarks.

I think the other thing that day underwriting pools, when we think about interest rates tariffs the impact we're able to make adjustments in real time.

Thank you well, we appreciate everyone joining us today. Thank you very much that's usually if anyone has any additional questions. We have to take your calls.

Dan Burrows: You can have some movement in when the recovery is split if the underlying loss has moved, in particular if they move between segment or various other changes that can happen there. You get most of that would come through the first quarter after a big event, i.e., Q2 this year. It is not really something I would expect to see in the future. I think it is important to note that overall, our estimate for cow wildfires, which is the main cat in this year, has actually come down slightly over the quarter when you look at the sum between the two pillars.

Now on a daily basis on the royalties are able to see.

We thank you all for your ongoing support your really good questions enjoyed their own and are a good day and high streets you soon take care Bye bye.

Uh huh.

Reprice readjust their thoughts on how the deal should be structured every single day. So that's a really important difference for us that we can do that in real.

Yeah.

Thank you that concludes today's conference call. Thank you for participating you may now disconnect.

Real time.

Yeah.

Yeah.

Thank you.

Yeah.

Yeah.

Thank you.

That does conclude the question and answer session today, and I'd like to turn call back to Tom bites for closing remarks.

Maya Shields: All right, thank you.

Operator: Thank you, Pablo. We now have Mike Dawinski with BMO. Please go ahead.

Thank you well, we appreciate everyone joining us today. Thank you very much that's usually if anyone has any additional questions. We're here to take your calls.

Maya Shields: Hey, thanks. Good morning. I wanted to follow up, I think, on the important point you all are making about your RPI or pricing levels being down less than the market. I know I think you quantified flat to off 10% in certain property lines because I believe you're a leader on the syndicate, and I think you mentioned cross-sellers is what's causing that. So I'm just trying to, maybe it's too technical, but I'm trying to understand how that works. Are you saying that the actual pricing that you all receive is better than the rest of the folks in the syndicate? It's like you're writing other lines of business, or are you taking into account other lines of business you're writing that's getting better pricing? Or maybe you can just kind of elaborate on the technicalities of how this works.

We thank you all for your ongoing support your really good questions enjoyed around and are a good day and I speak to you soon take care Bye bye.

Yeah.

Thank you that concludes today's conference call. Thank you for participating you may now disconnect.

Dan Burrows: Yeah, thanks for that. I think firstly, you have got to differentiate between a syndicate and the partnership underwriting. The syndicate is a fairly small part of the overall portfolio. The lead position is really held within the partnership. They are the guys that really built the portfolio back from 2018, 2019. When you think about the daily underwriting calls that we have, maybe two, three times a day, on those calls, if you look at certain clients, you might be selling them terror, casualty, property, and being able to leverage across those three, four, maybe even five, different cross-class offerings gives you a differentiated position. That is the first thing. Specifically, when you think about the syndicate, they are more of a primary underwriter. As you know, we only take a 20% variable cost share. So we do not really participate at that end.

Dan Burrows: But if the syndicate are offering a primary line, then it helps us leverage the excess play that we have got. That is purely to the syndicate, but it also translates back into the bigger portfolio, which is with the partnership, where we can use that as leverage as well. So it is leveraging how you deploy on a particular deal, and then it is leveraging your relationships with the brokers and the clients, and it is leveraging the fact that you are selling multi-class products to those clients. You are making the price. You are the price maker on those deals. It is a very different outcome than actually just being a subscription market asked to write a couple of million dollars at the end. Take it or leave it.

Maya Shields: Okay, that's very helpful. My follow-up, in the prepared remarks, I believe, it might have been Dan Burrows who said that PMLs are under 10% of equity for certain events at a 1 in 100 and 1 in 250. Is there, could you offer a rough corresponding industry loss for those events? Does a 1 in 100 mean a $30 billion event, or, if you can help us with that?

Alan: Hi, I'm Mike. It's Alan. We don't really think about the industry loss. Again, this is a ground-up model where we work through our PMLs based on various metrics. It is a verticalized market that we participate in, as discussed. It really is not based on industry losses. It's based on our portfolio. Again, it's driven by ground-up analysis for those particular two key natural perils.

Dan Burrows: Yeah, it's Johnny here. It really varies by peril as well. If you think about the wildfires, that was probably a $40 to $50 billion loss taking various points from the market. Some people would have that on their wildfire model out of the 1 in 500, for example. Obviously, if you've got a $40 or $50 billion wind loss into Florida, that would be a much shorter term period than that. It is quite difficult to assign industry loss to any particular return period. You really need to think about the peril and think about your own view of risk around that at the same time as well.

Maya Shields: Okay, got it. I guess, I think you are describing, and we appreciate why I think it is tough for sometimes investors to make good use of the PML data that companies provide, which, we appreciate that it is provided. Got it. Thank you so much.

Alan: Thanks, thanks.

Operator: Thank you. We now have Alex Scott with Barclays. Your line is open.

David Motonaden: Hi, good morning. First one I have for you is just on some of the comments you made on aviation and the price adequacy there and some of the actions you are taking. Can you talk about what kind of impact do you expect that to have on premium growth? How much of that has been completed already versus maybe we need to consider that over the next 12 months in premium growth?

Dan Burrows: I think, it is going to be difficult to grow in aviation unless we see those green sheets really improve the pricing. It just has not responded to the overall impact of those losses that we have seen in the all-risk sector. When we think about war, since Russia-Ukraine, we have written over $1 billion of premium with an 11% loss ratio. So we can lean in, given that there is rate adequacy and there is good margin in the business. The aviation market, there is a lot of activity towards the end of the year, and we are hopeful those green sheets will result in an ability to write some new business. But at the moment, we are disappointed in that class of business.

David Motonaden: Okay. All right. The MGU Commission, can you talk about that a bit? I want to understand how recent results will influence it as we think through the next year or two. Particularly, I think maybe the Russia-Ukraine sounded like it was from before that was set up. So, what are some of the things that have pressured combined ratios that will or will not influence that level?

Alan: Yeah, thanks, Alex. It's Alan. The profit commission with the TFP is on GAAP calendar year numbers, essentially. There are some adjustments, but they're all sort of calendar and based on the financials you see in front of you. Russia-Ukraine, we have said, is behind us. As a result, you would think that in 2026, assuming your underwriting performance continues to perform in the ranges that we've seen, excluding Russia-Ukraine, there would, of course, be a profit commission to the TFP. Our interests are aligned with TFP in that. They are going to write profitable business. Once they meet the hurdle rate, it's based on calendar year results that year. There is a carry-forward mechanism, but there's no loss to carry forward at this point because they've been on a 100% combined ratio in total. It will not, it's calendar year calculations.

Alan: In 2026, certainly, but even hopefully in 2025, there will be a profit commission, but it's based on the actual calendar year underwriting results.

David Motonaden: Got it. Thank you.

Operator: Thank you. Just as a quick reminder that to ask a question, please press star followed by one on your telephone keypad now. The next question comes from Rob Cox with Goldman Sachs. Please go ahead.

David Motonaden: Hey, thanks. I just wanted to ask on the tax rate guidance firstly. It seems like a step up from the mid-teens guidance previously. I just wanted to understand if that is really all just distribution geographically of income there. Would you guys expect a similar rate in 2026 and beyond?

Alan: Hi, Rob. It's Alan. Thanks for the question. You got the answer absolutely right to 2025. The tax accounting rules are you project to the end of the year. Where do you think the profits will be in the three subsidiaries that we have? One in the UK, one in Ireland, one in Bermuda, all have different tax rates. Right now, more of our profits are in our UK operation because of the beginning of the year and how California wildfires impacted Bermuda especially. We do expect through the rest of the year, it will be a 19% effective tax rate. It's too early to call for 2026. We're working through our planning process now. As with all of our peers, we'll work through that in the next three months and then refine it post-wind season.

Alan: At the time when we've figured out where our business plan expectations are for 2026, and we understand which subsidiary those fall in, we'll give you further updates on the tax rate for 2026.

David Motonaden: Got it. That is helpful. Then, just to follow up on the new share repurchase authorization, is there any way to think about how you might anticipate using that up in sort of a base case scenario?

Alan: Yeah, it is Alan again. It is a multifactor approach. Again, as we have stated previously, we look at capital management in the whole, and we want to use our capital to reinvest in the world first and foremost. Then we look at our outward reinsurance program, both strategically and tactically, what are we doing there? Then we look to return capital to shareholders. There is no easy bullet answer to share buybacks. Obviously, price is an important feature. At the undervalued rate we are trading at now, it is certainly appealing, but it is a $200 million authorization that you can sit out there for up to two to three years. We will look at it on a measured basis based on our capital position and the other factors in our thinking, as I said, that reinvesting in profitable opportunities and always reinsurance.

Alan: I wish I could give you more strict guidance on that, but we will certainly be, at the current share price, you can expect that we will do the right thing.

Operator: Thank you. We have another question from Andrew Anderson with Jefferies. Please go ahead when you are ready.

David Motonaden: Hey, thanks. Maybe following up on tax, I think there has been some discussion that there could potentially be offsetting credits to operating expenses in outer years. Are you considering that in any future plans or hearing of that?

Alan: Yeah, thanks, Alan. Again, that's, I believe you're referring to Bermuda tax law. In the accounting world, you can't really record any offsetting credits until the government actually passes tax law changes. We haven't seen those credits come through yet. We are anxiously waiting to see what it will be, but right now we're not taking credit for those, and we are not predicting those. When the legislation changes, we will put that into the mix, and that will affect our effective tax rate. Nothing is considered at this point.

David Motonaden: Okay. On the asset-backed finance and credit portfolio, can you talk about the sensitivity to interest rates there, either on the loss ratio or premium growth outlook?

Dan Burrows: Yes, Johnny here. I will take the loss ratio bit. I mean, obviously, across that type of portfolio, we are trying to get diversification. So we would not want exclusive exposure to interest rate. We would be trying to balance geographically, balance it amongst different economic factors as well to really build out a diversified portfolio. Obviously, when we price and do exposure management on there, we run a number of scenarios around sensitivities to a number of different economic variables to ensure that we are happy with the overall exposure. So I would say us thinking about things like that, it is really a core part of the portfolio. If you think about how it has been tested over time, we have seen a pretty severe shock on interest rate in the last few years. We have not seen any real material loss coming through from that at all.

Dan Burrows: In terms of other economic variables, it has been tested against. I think COVID is probably one of the biggest tests it could have got. If you think about before COVID, that would be that kind of scenario is the thing that would worry us on that book. Something that impacted the globe, something that impacted a number of different variables at the same time. The book actually came through that extraordinarily well. We had almost no loss at all from COVID. It is in the low 30s in terms of loss ratio across that period and in aggregate. So I would say we are really comfortable with the level of risk and the pricing adequacy in that class as a whole. Yes.

Dan Burrows: Dan Burrows here, just to add to that. I think the other thing, the daily underwriting calls, when we think about interest rates, the tariffs, the impact, we are able to make adjustments in real time. So on a daily basis, the underwriters are able to reprice, readjust their thoughts on how the deal should be structured every single day. So that is a really important difference for us that we can do that in real time.

David Motonaden: Thank you.

Operator: Thank you. I can confirm that does conclude the question and answer session today. I would like to turn the call back to Dan Burrows for closing remarks.

Dan Burrows: Thank you. We appreciate everyone joining us today. Thank you very much. As usual, if anyone has any additional questions, we are here to take your calls. We thank you all for your ongoing support, your really good questions. Enjoy the remainder of your day, and hope to speak to you soon. Take care. Bye-bye.

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