For specialty insurer and reinsurer, Fidelis Insurance Holdings Limited, utilising third-party reinsurance capital is seen as key to its evolution, according to Dan Burrows, Executive Chairman of Fidelis Bermuda and Group Managing Director.
Alongside the expansion of its capital base to more than $2.5 billion, Fidelis has also been growing its use of alternative, or third-party reinsurance capital, through its Socium franchise, and also its expanding catastrophe bond programme.
Prior to 2020, Fidelis was yet to enter the catastrophe bond market, but after successfully placing its first Herbie Re transaction in June of last year, two more have followed (Herbie Re 2020-2 and Herbie Re 2021-1), providing the firm with $550 million of capital markets backed protection.
In light of this recent growth, Artemis spoke with Burrows about the importance of third-party capital to Fidelis.
“I think the ability for us to attract and successfully deploy third-party capital from various sources is critical to the evolution of Fidelis,” said Burrows.
“In terms of what we buy and the capital we can attract to deploy, we purchase a wide variety reinsurance ; quota share, aggregates, occurrence, excess of loss, as well as cat bonds. And we engage with both traditional and non-traditional providers, but look for long-term partnerships.
“We’re continually looking at how we can, or should we be more active in the ILS fund space, but it’s critical that we take a measured approach and avoid pitfalls,” he continued.
Importantly, stressed Burrows, the company’s activities in the insurance-linked securities (ILS) space is “not a me too”, meaning the re/insurer doesn’t want to do it simply because it’s what others are doing.
“We want to do it because actually we’ve got a product offering that appeals to investors and can accelerate assets under management (AuM). And I think there’s a niche space for that, especially on the ESG side,” said Burrows.
Expanding on this, Burrows told Artemis that as social and responsible investing continues to gain traction, his firm is particularly interested in investor appetite and how Fidelis can expand its product offering.
“And it also fits the moral footprint of the business. I think you all know Richard and the executives here, where things like ESG are part of the way we think. We’ve had a big push on anti-slavery clauses in the London market in the last two or three years. We cut back on mining, and we’re very aware of the whole universe of animal testing and how that relates We also hired Victor Riega recently as Head of Sustainability for Fidelis and he will be a wealth of knowledge and experience to our company to help us drive momentum in the ESG/Insurance sector.
“So that’s been embedded in the underwriting for quite a long time, although we know we have a lot more work to do. And it’s nice to know that there are investors out there that also want to put their money behind entities like us that are best practice. So there should be a meeting of minds there and a great opportunity,” said Burrows.