Fidelis targets hard market growth as it launches New York IPO

Fidelis Insurance Holdings Limited, the specialty insurance and reinsurance firm launched by Richard Brindle, has launched its awaited New York initial public offering (IPO), as the company seeks new capital to fund additional expansion into the hard market conditions.

The re/insurer explained that the IPO will raise capital contributions to its insurance operating subsidiaries.

Together with other sources of liquidity that Fidelis has at its disposal, Fidelis believes this will help it to “take advantage of the ongoing rate hardening in the key markets in which it participates by writing more business under its planned strategy.”

It’s both a capital raising opportunity and a chance for some existing shareholders to recognise some of the value created by Fidelis, as within the IPO process some existing shareholders will sell common shares, the proceeds of which will not go to the company.

In total, the initial public offering (IPO) will see 17,000,000 common shares in Fidelis Insurance Holdings Limited offered, made up of 5,714,286 common shares offered by Fidelis itself and 11,285,714 common shares that will be sold by some of its existing shareholders.

On top of this, the underwriters of the IPO will have a 30-day option to purchase an additional 2,550,000 common shares from the selling shareholders.

The IPO price is anticipated to be between US $16.00 and US $19.00 per common share, suggesting it could raise from US $312.8 million to US $371.45 million, although remember not all of that proceeds goes to the company.

After the IPO, Fidelis’ common shares are expected to trade on the New York Stock Exchange under a ticker symbol of “FIHL”.

While it’s not a significant capital raise, the process of going public will position Fidelis to further expand the capital base of its balance-sheet business and provide a platform for additional capital raising going forwards as well.

Recall that Fidelis separated its business, creating a Managing General Underwriter, named Fidelis MGU, as a separate entity from the existing the Fidelis Insurance Group balance sheet companies.

As a result, origination / underwriting and capacity are now distinct entities and this provides significant capital flexibility to Fidelis, as is being demonstrated here.

This IPO and listing continues the development of the structure envisioned by Brindle and the other Fidelis leaders, as they look to construct a flexible model that can utilise capital in different ways to support the underwriting of the MGU.

It positions the Fidelis balance-sheet entity as a vehicle that can support the underwriting opportunities that current hard market conditions present, while also delivering on a platform that can grow further into the future, no matter the stage of the market cycle.

As of the end of 2022, Fidelis had almost US $2 billion of shareholders’ equity, $58.4 million of Series A Preference Securities and $447.5 million of long-term debt making up its capitalisation.

For more details on the investor-backing for the Fidelis MGU read our article from the announcement of this separation arrangement.

Fidelis is already active in partnering with investors and sees utilising third-party reinsurance capital as key to its evolution.

The re/insurer also successfully sponsored its fourth catastrophe bond in the Herbie Re series towards the end of 2022, another key capital source for the Fidelis business.