This article first appeared on GuruFocus .
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Operating Net Income:$29 million, or $0.34 per diluted common share, in Q2 2026.
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Six-Month Operating Net Income:$117 million, or $1.31 per diluted common share.
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Annualized Operating Return on Average Equity:5.1% for Q2 2026; 10.1% for the first half of 2026.
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Book Value per Diluted Common Share:$26.56, up 23% year-over-year including cumulative dividends.
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Gross Premiums Written:$1.3 billion, up 6% versus the same quarter last year.
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Net Premiums Earned:$515 million in Insurance and $66 million in Reinsurance.
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Combined Ratio:99.5% for Q2 2026; 93.1% for the first half of 2026; 86.4% over the last 12 months.
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Catastrophe and Large Losses:27.8 points of the combined ratio, or $162 million, in Q2 2026.
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Attritional Loss Ratio:28.2 points of the combined ratio for Q2 2026.
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Net Favorable Prior Year Development:$33 million in Q2 2026.
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Policy Acquisition Expenses:32 points of the combined ratio for Q2 2026.
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General and Administrative Expenses:$29 million in Q2 2026.
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Net Investment Income:$44 million in Q2 2026.
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Net Income from Other Investments:$26 million in Q2 2026.
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Effective Tax Rate:16% for Q2 2026.
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Share Repurchases:2.8 million common shares for $60 million at an average price of $21.60 per share in Q2 2026.
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Capital Returned to Shareholders:$73 million in Q2 2026, including $60 million in share repurchases.
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Quarterly Dividend:$0.15 per share, payable in September.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Gross premiums written grew by over 6% in both the quarter and year-to-date, driven by strong performance from new underwriting partners and targeted deployment into attractive risk-adjusted return areas.
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Book value per diluted common share increased by 23% year-over-year, reflecting strong business performance and a continued focus on creating long-term shareholder value.
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Returned $73 million to shareholders in the quarter, including $60 million in share repurchases, which have been highly accretive to book value and earnings per share.
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The underwriting partnership strategy is gaining momentum, with new partners performing ahead of through-the-cycle targets and a strong pipeline of high-quality underwriting teams seeking to partner with the company.
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The company secured an additional whole-account quota share arrangement with a leading US insurance partner, which supports growth, optimizes capital, and validates the quality of the portfolio.
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The portfolio is well-positioned with stable probable maximum losses (PMLs), including a 1-in-250 California earthquake PML in the mid-single digits and a 1-in-100 Southeast, Gulf, and Caribbean clash exposure below 10% of shareholders' equity.
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The company demonstrated agility in capitalizing on geopolitical dislocations, such as the Middle East conflict, writing over $1 billion in war-related premium since Russia-Ukraine with a sub-20% loss ratio.
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Net favorable prior year development of $33 million was recognized in the quarter, indicating better-than-expected loss emergence across multiple lines of business.
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The company maintains a strong capital position, allowing for both growth investments and accretive capital returns, with $280 million in repurchases in the first half of 2026 contributing $0.90 to diluted book value per share.
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The company's leadership position in the market allows it to outperform peers in softening conditions, with rate decreases closer to single digits compared to the broader market's 15-20% decline in reinsurance cat renewals.
Negative Points
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The combined ratio for the second quarter was 99.5%, significantly higher than the first half's 93.1%, due to a higher-than-normal number of large loss events.
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Catastrophe and large losses were 27.8 points of the combined ratio, or $162 million, including a $60 million loss from the Middle East and a $34 million loss from the Ras Laffan gas plant explosion in Qatar.
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The property market remains competitive with continued rate contraction across a number of classes, requiring disciplined underwriting and selectivity that could limit growth opportunities.
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The company experienced a reescalation of conflicts in the Middle East and increased competition in those lines, leading to fewer risks aligning with its underwriting appetite.
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The policy acquisition expense ratio was higher than anticipated in the Reinsurance segment, partly due to a shift towards quota share deals which carry higher commissions.
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The company's growth is expected to moderate in the third quarter due to seasonality, with net earned premiums in Reinsurance expected to be between $130 million and $160 million, potentially impacting quarterly results.
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The company faces uncertainty in predicting future growth in Asset Backed Financing & Portfolio Credit, as other lines of business are more cyclical and dependent on market conditions.
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The company's operating return on average equity for the second quarter was only 5.1%, well below its through-the-cycle target of 13-15%, highlighting the impact of the volatile loss quarter.
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The company's effective tax rate of 16% for the quarter could be a headwind if it remains elevated, potentially impacting net income and returns.
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The company's reliance on outwards reinsurance to manage volatility and improve margins introduces counterparty risk and could be less effective if the retrocession market becomes less competitive.
Q & A Highlights
Q: How do you evaluate the underwriting profitability associated with the Middle East conflict, given the strategy to lean in and the risk of randomness and losses? A: Dan Burrows (CEO) explained that the company leveraged its capital allocator model to identify The Fidelis Partnership as the best partner to execute on the opportunity. They set a risk framework immediately and deployed capacity on a per-vessel, per-voyage, per-cargo basis, avoiding broader facilities. This first-mover advantage has resulted in a sub-20% loss ratio on this business. Jonny Strickle (Group Managing Director) added that the overall war book has written over $1 billion in premium since Russia-Ukraine with a sub-20% loss ratio, and the Middle East portfolio has performed well given their market share of over 5% in these lines.
Q: How does the second quarter catastrophe and large loss ratio compare to your expectation for a typical second quarter, given the seasonality of the property book? A: Dan Burrows (CEO) stated that the company manages to an annual plan, not quarter-to-quarter. The last 12-month combined ratio is 86.4%, in line with expectations, and the first half of 2026 is running at just over 10% ROAE with a 93% combined ratio, broadly on plan. Jonny Strickle (Group Managing Director) clarified that they expect a mid-40s loss ratio overall for insurance with about a third from large and cat losses, while Reinsurance is expected to have a mid-40s loss ratio with half from big events. More dollar cat and large load is expected in the second half due to higher earned premium.
Q: Can you talk about the profitability threshold applied to new underwriting partners and lines of business, and whether the same lens is applied as for existing partners? A: Jonny Strickle (Group Managing Director) confirmed that exactly the same lens is applied to new underwriting partnerships. New partners must compete with existing partners for capital deployment based on the best risk-return relationship. He noted that while it's early days, the new underwriting partners' performance is beating their through-the-cycle hurdles. Dan Burrows (CEO) added that new partners must meet or beat the existing framework, and they are pleased that this is happening.
Q: Was the new whole-account quota share arrangement struck in anticipation of an uptick in gross premium growth, or was it more of a surplus management strategy? A: Jonny Strickle (Group Managing Director) explained that the arrangement was much more of a strategic relationship expected to build out and support the portfolio over the longer term. It covers all business written, whether through The Fidelis Partnership or new underwriting partners, positioning the company well to scale in either over time.
Q: What are you seeing regarding the effect of alternative capital in the marketplace, and what is your approach to using it? A: Dan Burrows (CEO) noted that alternative capital is contributing to the abundant capital in the market. As a buyer, the company interacts with ILS and funds, and finds the retrocession market to be one of the most competitive. This is enhancing their outwards reinsurance program, improving margin, and managing volatility. He emphasized that alternative capital is here to stay and is helping improve their margin.
Q: Can you talk about the hyperscale opportunity for data center build-out and the company's approach? A: Jonny Strickle (Group Managing Director) stated that the company continues to see this as an attractive opportunity but maintains a "pretty vanilla" risk appetite, sticking to construction risk and avoiding chips business interruption. Since data center build-out is driving economic growth, particularly in the US, the company will continue to participate where it can do so in a vanilla way.
Q: Given the current market dynamics, should we be thinking consensus ROAEs are at the very low end of the range for the foreseeable future? A: Dan Burrows (CEO) expressed confidence in the guidance around ROAE and combined ratios. The last 12 months' combined ratio of 86.4% demonstrates the ability to deliver target metrics through a more competitive environment. Halfway through the year, the company is on plan, and with more premium earned in Q3 and Q4, they expect to achieve their targets of 13% to 15% ROAE and mid-to-high 80s combined ratio. He noted that while the market is more competitive, the bifurcation between lead and follow markets is being managed through improved outwards reinsurance.
Q: Is there still an opportunity for share buybacks in the private market versus the public market on a go-forward basis? A: Allan Decleir (CFO) confirmed that in the first half of the year, the company repurchased $280 million worth of shares, with $216 million through privately negotiated transactions with existing institutional shareholders. While they don't comment on shareholders' aspirations, they will continue to talk to private shareholders when they come to them, but will focus on the open market for now.
Q: Was there any growth coming from existing partners in the Asset Backed Financing & Portfolio Credit line, or was it all from new partnerships? A: Jonny Strickle (Group Managing Director) explained that the company has been growing consistently with The Fidelis Partnership in this line over the last few years and expects to continue. The new partnership targets a slightly different client base with a different geographical focus, making it complementary to The Fidelis Partnership. Both opportunities outside and within The Fidelis Partnership are being pursued.
Q: How has the bifurcation between lead and follow markets evolved over the last 6 to 12 months, and how durable is it? A: Dan Burrows (CEO) noted that at midyear reinsurance cat renewals, rates are down 15% to 20% per broker estimates. However, by leveraging their lead position, enhanced outwards reinsurance structure, and ability to pivot capacity, the company is outperforming this metric, with rate decreases closer to single digits. He stated that the spread between lead and follow markets has widened over the last 12 months, and being a leader provides a distinct, differentiated advantage.
Q: Given the quarter's losses, is there any change in frequency assumptions or pricing and portfolio construction going forward? A: Jonny Strickle (Group Managing Director) stated there is no change in frequency assumptions. The company expects three or
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
