Fidelis takes capital over $2.4bn, plus its cat bonds & sidecar quota shares

Fidelis Insurance Holdings Limited, the specialty insurance and reinsurance firm launched by Richard Brindle, has taken its capital raising efforts in 2020 to more than $1.3 billion and that’s just its equity and debt raises.

Fidelis has expanded its capital base significantly over the year, more than doubling its total capital to over $2.4 billion at this time.

On top of this, Fidelis entered the catastrophe bond market for the first time, as it sought to add efficient retrocessional reinsurance that also expands its capacity to write more business in 2020 for the first time.

That resulted in two issues of Herbie Re catastrophe bonds, which between them secured Fidelis $400 million of reinsurance from the capital markets.

Also, in recent weeks, it’s been reported widely that Fidelis has raised commitments of around $250 million for a new aggregate retro collateralised sidecar offering, possibly under its Socium Re brand, which is expected to write business incepting at the January renewals.

Another lever added this year, was the 20% whole account reinsurance quota share with Berkshire Hathaway, which acts as a further extension of sorts to its limits.

All of which extends the capital Fidelis now has at its command, enabling it to write more business, be more selective about what it retains and also earn fee income in the process.

In its latest capital raise, Fidelis has added $185 million of new capital, including $60 million of equity capital from existing and new investor relationships including Alfa Insurance and affiliated companies, plus $125 million from institutional investors through a 6.625% tranche of Fixed-Rate Reset Junior Subordinated Notes due 2041.

These latest debt notes are redeemable at Fidelis’ option at each interest reset date which occurs every five years and have received Tier 2 capital treatment under the Bermuda Monetary Authority’s Group Supervision Rules.

Richard Brindle, Chairman and CEO of Fidelis, commented on the news, “We are very pleased to have Alfa as our latest equity investor. We have built a strong relationship with the Alfa team over the years through their quota share support of our underwriting and our participation on their treaties. Their equity investment further cements our partnership and long-term relationship. Having raised over $1.3 billion of capital in the past year, we have been able to take advantage of the hardening market conditions and have the financial and human resources to continue to build on our existing portfolio in 2021.”

John Hemmings, Senior Vice President, CFO and Chief Investment Officer of Alfa Insurance added, “We are excited about this opportunity to broaden our relationship and expand our partnership with Fidelis as equity shareholders. We have great respect and admiration for the Fidelis management team’s proven track record and have great confidence in their ability to generate successful growth and financial strategies in the future. Alfa Insurance seeks to be a long-term partner and is dedicated to helping Fidelis build a successful and profitable company.”