By Michael Jones
April 8 - (The Insurer) - S&P Global Ratings has revised its outlook on Fidelis Insurance Holdings from positive to stable on the back of Russia-Ukraine-related adverse development and the carrier's $160 million to $190 million Los Angeles wildfire loss estimate.
The rating agency also affirmed the group's BBB issuer credit rating as well as the A-minus issuer credit and financial strength ratings on the core insurance and reinsurance operating entities.
S&P said the outlook revision followed Fidelis' weaker underwriting performance in 2024 versus peers and expectations that its 2025 results could also be strained by wildfire losses.
The rating agency noted that Fidelis' combined ratio deteriorated to 99.7% in 2024, compared with a prior five-year average of 87.9%. This was largely due to adverse prior year development of $287 million in Q4 2024 associated with Russia-Ukraine-related aviation litigation.
Exposure to the Los Angeles wildfires of $160 million to $190 million, based on an industry loss estimate of $40 billion to $50 billion, is expected to weigh on 2025 underwriting performance, the rating agency said. S&P's base-case scenario assumes a 2025 combined ratio in the range of 94% to 97%, which it said should improve to the low-90s in 2026.
Fidelis' company leverage is expected to remain below 25% and its fixed charge coverage to be above 4x in 2024-2026.
