Fidelis Insurance Holdings Limited (Fidelis) has delivered a robust financial performance in the first quarter of 2024, with a significant uptick in premiums and a solid combined ratio. The company announced a 21.6% increase in growth premiums written, alongside a combined ratio of 85.8%, indicating efficient underwriting profitability.
An annualized operating return on average equity (ROAE) of 14% was reported, with expectations to maintain an ROAE between 14% to 16% for the full year. Fidelis also revealed its investment in a new Lloyd's Syndicate, set to launch in July, which is anticipated to bolster long-term growth.
The company's strategic focus remains on growth opportunities in their core lines, including property direct and facultative, and marine insurance. With a commitment to a robust balance sheet and shareholder returns, Fidelis is poised to capitalize on favorable market conditions.
Key Takeaways
- Fidelis Insurance Holdings reported a 21.6% increase in growth premiums written in Q1 2024.
- The company achieved a combined ratio of 85.8% and an annualized operating ROAE of 14%.
- A new Lloyd's Syndicate will be launched by Fidelis, expected to contribute to long-term growth.
- Fidelis is confident in generating an ROAE between 14% to 16% for the full year.
- The company sees growth opportunities in property direct, facultative, and marine insurance.
- Fidelis returned $16.8 million to shareholders through dividends and repurchases.
Company Outlook
- Fidelis maintains a positive outlook for the future, focusing on profitable underwriting and book value growth.
- The specialty segment, including property and marine insurance, shows attractive conditions and pricing.
- The bespoke segment continues to lead with tailor-made products and stable underwriting performance.
- The reinsurance segment has achieved higher rate increases, with a strategic portfolio management approach.
Bearish Highlights
- Executives noted no significant increase in market capacity, with inflation driving demand for insurance.
Bullish Highlights
- Fidelis sponsored two new Herbie Re capacity bonds for $150 million to cover US earthquake and storm events.
- The company's reinsurance purchasing strategy includes more limit and the renewal of Herbie Re bonds for US natural disaster protection.
Misses
- The company does not engage in casualty business, focusing instead on lines with shorter reserve durations and lower volatility.
Q&A Highlights
- The company's share buyback program may continue through 2024, conditional on book value.
- Reserve reviews are conducted quarterly, with adjustments made based on loss activity.
- Fidelis buys a broad range of reinsurance products and is open to increasing exposure through their syndicate.
- Executives did not provide specific details on hurricane exposure but mentioned proportional protection and a broad suite of products for risk mitigation.
Fidelis Insurance Holdings Limited, with its strategic investments and focus on core insurance lines, remains optimistic about its performance amidst current market conditions. The company's commitment to shareholder returns and a strong balance sheet, coupled with its new venture into the Lloyd's market, positions it well for future growth and profitability.
InvestingPro Insights
Fidelis Insurance Holdings Limited (FIHL) has shown remarkable financial strength in the last twelve months, which is reflected in its real-time data metrics. With a market capitalization of $2.27 billion and a strikingly low price-to-earnings (P/E) ratio of 0.99, Fidelis stands out as a company that is potentially undervalued. This low P/E ratio, especially when compared to the adjusted figure of 1.02 from the last twelve months as of Q4 2023, suggests that the company could be trading at a discount relative to its earnings capacity.
InvestingPro Data:
- Market Cap (Adjusted): $2,270M
- P/E Ratio: 0.99
- Revenue Growth (Quarterly) for Q4 2023: 29.1%
The revenue growth of 29.1% in the last quarter of 2023 indicates that Fidelis has been expanding its top-line earnings at a robust pace. This is particularly relevant given the company's focus on growth opportunities and its strategic investment in a new Lloyd's Syndicate. Such a significant increase in revenue could be a precursor to sustained profitability and a solid foundation for the company's expansion plans.
InvestingPro Tips:
- Fidelis is trading at a low earnings multiple, which could attract investors looking for value opportunities.
- The company has experienced a high return over the last year, which aligns with the optimistic tone of the company's reported performance and future outlook.
With these insights, investors may find Fidelis an intriguing option to consider. To explore more about Fidelis and gain access to additional InvestingPro Tips, visit https://www.investing.com/pro/FIHL. Currently, there are 9 more InvestingPro Tips available that could provide further guidance on the company's financial health and investment potential. For those interested in an InvestingPro subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Fidelis Insurance Holdings (FIHL) Q1 2024:
Operator: Good morning, ladies and gentlemen, and welcome to the Fidelis Insurance Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions]. With that, I'll now turn the call over to Miranda Hunter, Head of Investor Relations. Ms. Hunter, please go ahead.
Miranda Hunter: Good morning and welcome to the Fidelis Insurance Group first quarter of 2024 earnings conference call. With me today are Dan Burrows, our CEO; and Allan Decleir, our CFO. Before we begin, I'd like to remind everyone that statements made during the call, including the question-and-answer section may include forward looking statements. These statements are based upon management's current assessments and assumptions and are subject to a number of risks and uncertainties. These risks and uncertainties are described in our 2023 annual report on Form 20-F filed with the SEC on March 15th. Although we believe that the expectations reflected in forward-looking statements have a reasonable basis when made, we can give no assurance these expectations will prove to be achieved. Consequently, actual results may differ materially from those expressed or implied. For more information, including on the risks and other factors that may affect future performance, investors should also review periodic reports that are filed by us with the SEC from time to time. Management will also make reference to certain non-GAAP measures of financial performance. The reconciliation to US GAAP for each non-GAAP financial measure can be found in our current report on Form 6-K furnished with the SEC yesterday, which contains our earnings press release and is available on our website fidelisinsurance.com. And with that, I'll turn the call over to them.
Dan Burrows: Thank you, Miranda. Good morning, everyone, and welcome to Fidelis Insurance Group first quarter earnings call. I'm very pleased to report that we delivered a strong start to the year as we successfully capitalized on the continued mature hard market conditions, leaning into our core lines, achieving sustained profitable growth, leveraging our lead position to generate alpha results, and broadening the footprint of our business. In the first quarter, we increased growth premiums written by 21.6% and deliver the combined ratio of 85.8%, both of which were in line with our expectations. These excellent results reflect our strong underwriting and risk selection capabilities across our growing and well diversified book of business. We continue to see positive pricing across our portfolio with an RPI for the first quarter of 112%, demonstrating our ability to achieve preferential terms in a verticalized market. We delivered another strong course of returns with an annualized operating ROAE of 14%. Again, in line with our expectations, we also grew book value per diluted common share for $21.22. For the full year, we remain on track to generate ROAE in the 14% to 16% range as we earn a greater portion of our capacity exposed premium in the second half of the year. As our results demonstrate, our strategy and structure are working exactly as intended, we have the flexibility, discipline, and market access to deploy capital where we believe there are attractive risk reward opportunities in what continues to be the best market we have seen in decades. We are leveraging our scale, lead positioning and deep relationships with brokers and clients to grow our business and have constructed a diversified portfolio, short held specialty risks, which we believe is well positioned to deliver combined ratios in the mid to high 80s throughout the cycle. And as a reminder, would you not write casualty lines. Each strength of our strategy is the daily underwriting calls, which were attended by all underwriters, both the Fidelis Insurance Group and the Fidelis partnership. These calls provide insight across our entire portfolio, giving a forum to discuss our offering on each individual risk. They enhance our ability to cross sell across target lines, and help us quickly respond to market dynamics and capitalize on areas of opportunity. We continue to see opportunities across our core lines with property direct and faculty being a great example where we delivered growth of 36.5% compared to prior period, and we are capitalizing on attractive pricing within our broader -- portfolio. In the first quarter, we announced our participation and investment in the new Lloyd's Syndicate 31 23 with the data partnership execute our capital and underwriting strategy and broadening the footprint of our business. For the targeted launch date of July 1st, this vehicle is expected to add to a long-term growth by providing access to enhanced ratings platform below the licensing and Lloyd's only business. The Syndicate right business across multiple insurance and reinsurance policies more than extension of our strategy to leverage our expertise to take lead positions. Fidelis Insurance Group will be taking a variable credit share across the portfolio, which enables us to access additional business channels that align to our current risk appetite. This is a perfect example of why our underwriting relationship with the Fidelis partnership works so well. Our long term agreement was designed to enable us to match the right risk with the right capital, exercising our right of first refusal with this variable process air allows us to do just that, participating in the lines where we have more risk appetite. As we consider industry events in the quarter, we wanted to touch on the March 26th Baltimore Bridge collapse, which will impact the specialty insurance market. Given the complexities surrounding the event, it could take years to fully resolve. We continue to monitor developments and believe any loss resulting from the bridge collapse will be manageable within our diversified portfolio. In summary, I'm very pleased with our first quarter performance, which positions us for another year of strong profitability, growth, and return. With that, I'll pass it over to Allan to walk through our financial results in more detail.
Allan Decleir: Thanks, Dan, and I'd also like to welcome everyone joining our first quarter earnings call. As Dan mentioned, we had an excellent first quarter to operating net income of 87.3 million or $0.74 per diluted common share and an annualized operating return on average equity of 14%. Our book value for diluted common share at March 31 was $21 and $0.22. Looking at our gross premiums written, we had excellent top line growth of 21.6% in the quarter to 1.5 billion compared to the first quarter of 2023. This was driven in large part by the specialty segment, which grew by 199.9 million or 24% to 1 billion. This is consistent with our expectations for growth to be broadly in line with what we saw last year. Specialty growth was primarily driven by property DNF, which saw an increase of 62.4 million or 36.5% from the prior year period, benefiting from the continued strong rating environment and new business. The growth is in line with the overall 38.7% growth we saw in this class across 2023. Other drivers of growth within our specialty book in the quarter included other property. We saw an increase of 55.7 million, and marine we saw an increase of 49.9 million. As a reminder, there is seasonality within our specialty book with Marines and aviation and aerospace being more heavily weighted to the first half of the year, while in property DNF, which we expect to be the key driver of specialty growth this year. We anticipate a more even distribution of premium across the quarters. Bespoke premiums were consistent with prior periods with first quarter gross premiums written of 153.5 million, an increase of 1.8% versus prior year. Our reinsurance segment grew by 66.4 million or 25.5% driven by property reinsurance. As Dan discussed in our year end call, we write approximately a third of our reinsurance book at one-one, and in 2024, we saw strong one-one renewals achieving RPIs of 118%. Looking ahead, premiums from the new Lloyd Syndicate 31 23 variable quarter share, and our 9.9% investment in the Syndicate will flow through each of our three segments. Our participation in the Syndicate won't materially impact our expectations for growth this year. On a net premium's earned basis, we delivered an increase of 26.4% from the prior year to 488 million in the first quarter of 2024 consistent with our growth and growth premiums written. As noted by Dan, our premiums are not earned on a straight line basis, property catastrophe premiums more heavily weighted the back half of the year. Our excellent underwriting performance resulted in a combined ratio of 85.8% for the first quarter, which included a loss ratio of 37.4%. This 37.4% is composed of attritional losses, catastrophe, and large losses, and prior year development. Looking at attritional losses, in the first quarter, we had 146.3 million or 30% compared to 139.5 million or 36% in the prior year period. Catastrophe fee and large losses for the first quarter were 103 million, which includes a 51.2 million provision for the Baltimore Bridge collapse. In addition to other IBNR and smaller events in various lines of business, including aviation and aerospace, marine and property DNF. Specific to the Baltimore Bridge collapse, our exposure is in line with our market position. We anticipate that any settlement will take a few years to play out and as that we have set our provision based on a probabilistic model. We have net favorable prior year development of 67 million for the quarter versus 2.1 million in the prior year period. Of the 67 million for the quarter, specialty was 34.4 million, reinsurance was 24.3 million, and bespoke was 8.3 million. And this was all primarily driven by better-than-expected loss activity. Turning to expenses, policy acquisition expenses from third parties were 27.9 points of the combined ratio for the quarter consistent with the prior year period. The Fidelis partnership commissions were 15.7 points of the combined ratio for the quarter of which 1.8 points related to accrued profit commissions due to the strong underwriting results in the quarter. And finally, our general and administrative expenses were 4.8 points of the combined ratio for the quarter compared to 4.3 points of the combined ratio in the prior year. Looking now at investments. Net investment income increased to 41 million for the first quarter of 2024, compared with 20.4 million in the prior year period. During the first quarter of 2024, we sold $201.2 million of securities with an average book yield of 0.9%, resulting in a realized loss of $7.4 million. We reinvested the proceeds in securities with an average purchase yield of approximately 4.9%. At March 31st, 2024, the average rating of fixed income securities remains very high at AA minus with a book yield of 4.2%. Duration has lengthened slightly to 2.2 years. Turning to capital management, we remain committed to maintaining a strong balance sheet. As I mentioned last quarter, our capital management strategy includes first allocating capital to support and grow our business in attractive segments of the market; Second, using outwards reinsurance as a flexible and aligned source of capital; and finally, returning excess capital to shareholders through a combination of share buybacks and dividends. Specifically, during the first quarter, as we mentioned, we grew our premiums and targeted lines seeing overall premium growth across our book of 21.6%. Regarding outwards reinsurance, we sponsored two new --of our Herbie Re capacity bond for $150 million of protection to cover earthquake and main storm events in the US, enhancing our overall outwards program, and we returned $16.8 million to shareholders through 11.8 million of common dividends and repurchases of $5 million. Subsequent to March 31, we have repurchased another $8.3 million of share. As of today, we have $36.7 million remaining in our share repurchase authorization. In summary, I'm very pleased with our excellent financial performance in the first quarter of 2024. Looking ahead, we are confident about the future as we continue to focus on delivering profitable underwriting and book value growth. I'll now turn it back to Dan for additional remarks.
Dan Burrows: Thanks, Allan. As you can see, we entered 2024 in an incredibly strong position. We are operating in a sustained hard market with attractive levels of pricing across our portfolio and are practically remains to actively capitalize on the significant opportunities this presents. Taking a closer look at our segment, in specialty, which is our largest conditions and pricing remain attractive across our core lines, and in the first quarter, we achieved specialty RPIs of 111%. As a reminder, our key drivers of specialty of properties, direct and faculty, marine and aerospace, and our aim is to be a top three market for these classes. Our appetite for property direct and facultative has increased since late 2019 in response to attractive pricing levels given by the frequency of natural catastrophe and climate driven events, and the exit of a number of larger carriers. Following $120 billion of natural capacity losses in 2023 and an active start to 2024, including several US severe weather events, the market has remained dislocated with increased demand and no new meaningful supply of capital coming in. We continue to see attractive opportunities to deploy capacity across this key line of business in line with our targeted risk selection approach, and we are pleased with the continued strong performance of this line during the quarter. Marine also remains a significant market for us where we're able to leverage our leadership position to cross sell and set pricing terms and conditions across multiple lines. We are seeing particularly attractive opportunities in large marine construction where significant capacity is required and we've had several new business wins this year. We've tried ourselves and our ability to innovate, enabling us to offer meaningful solutions to our clients. We are an established leader in the classes we participate in, always looking to create alpha performance. Looking ahead, the specialty market continues to offer growth across our four lines at attractive returns, and we expect specialty to continue to contribute to our growth throughout 2024. In bespoke, our established relationship with clients and brokers along with our underwriting expertise enables us to maintain our position as an industry leader, particularly when considering the high barriers to entry for others given the nature of the underlying risks. The unique nature of this business results in a less commoditized, more tailor made product that delivers low volatility underwriting performance with less exposure to typical market cycle. Given the highly tailored nature of this portfolio, premiums do not follow a regular predictable schedule. The first quarter was a solid start for the fiscal portfolio with premium in line with expectations. Looking ahead, our pipeline of structured risk transfer and political risk deals for the second quarter is in line with the prior year period and we expect opportunities to continue for the rest of 2024. Finally, in reinsurance, we continue to execute our strategies of deploying capacity at targeted attachment points with core clients, and this was an excellent quarter for this segment. Rate remains a practice for an enhanced pricing environment, an adjustment of terms and conditions over the past few years, and we were able to achieve higher rate increases across our portfolio given our thoughts from price leadership. RPI for the quarter, there was 118% and was the main driver for premium growth year on year. We continue to see clients looking to buy more limits in the US and Europe for our ability to offer private layers. Helped us secure our place on programs, and whilst we are beginning to see an uptick in demand, there's been no major influx of new capacity. We continue to manage our portfolio in line with our view of risk and are happy with our position heading into the rest of the year. [indiscernible] briefly on four one, we saw a positive rate movement continuing in April where our portfolio is driven by Japanese future of renewals. We continue to enhance our broaden and established relationships in the region to create opportunities on our fees of the growth in our portfolio. As we look ahead to the rest of the year, we are focused on deploy capital with best underwriting opportunities -- will further enhance the -- to deliver consistently compelling returns through the cycle and create value for our shareholders. One example is the new Lloyd Syndicate, which opens the door to exploring additional opportunities within Lloyd and longer term, we believe this will lead to broader opportunities globally as we continue our focus on aligning our capital to the right risk. In closing, 2024 is up to an excellent start. We are pleased with the momentum we had coming out for the first quarter and our ability to capitalize and opportunities across our portfolio. We are confident in the outlook for our business and remain on track to deliver operating ROAE in the 14% to 16% range for the full year, which is above our long term target. We continue to see growth potential in the current market and our scale, lead positioning, balance sheet strength and expert execution from our dedicated teams positions off wealth to deliver sustainable long-term profitable growth and create meaning value for our shareholders. With that, I'll turn it back to the operator.
Operator: [Operator Instructions] With that, our first question comes from the line of Matt Carletti with Citizens JMP.
Matt Carletti: I wanted to start, I guess a two-part question on the Baltimore bridge loss. I guess one, if you could give us a little more perspective on kind of how you set that loss reserve specifically, if you can, kind of what your view of industry loss is or if you even able to kind of translate in those terms. And secondly, just what impact do you think that loss might have on the related particularly marine but related markets?
Dan Burrows: I think firstly we look at Baltimore and say it's within expectation given our market profile. As you know, we take a standard reserving approach, we would weight limits against the full range of probabilistic outcomes. We've written over a billion dollars of specialty in the quarter, we think therefore the loss, any loss is very manageable within that sort of diversified portfolio. But it's very complex and it's very early. So I think to talk about, so the second part of your question, how we think about it will impact the market? We'll just wait for it to develop and see what the impact to the market will be in the future. I just think it's too early to think about exactly how pricing will be affected.
Matt Carletti: And then maybe just a modeling follow-up question. Policy acquisition costs by segment had some variation and you referenced mix of business and some reinsurance seeding commissions. Is there any -- is it just kind of quarterly-to-quarterly fluctuation there or is there anything kind of more forward looking we should think about? I guess asked in other way. Is there any reason to think kind of where we sat by segment on like a full year ‘23 level? It would look materially different for full year ‘24.
Allan Decleir: No, I think you have the right answers. One important factor to always consider on our book of business is that we do buy a significant amount of outwards reinsurance, and that can also significantly impact the post-acquisition costs on a quarter-to-quarter basis. If it's quarter share business that we buy on an outwards basis, there's a seeding commission and a profit commission that comes back, back to us. It can fluctuate quarter to quarter, depending on mix of business that is written and earned in the quarter. But I think overall, the run rate in the first quarter and in 2023 is the way to think about it.
Operator: Your next question comes from Mike Zaremski with BMO.
Mike Zaremski: Just following-up, because I think some of us are trying to track all the what each company's thinking on the Baltimore bridge losses. Some companies have said like the range is 1 billion to 3 billion, they're reserving at the upper end. Just curious if you wanted to provide any kind of color on that. If not, I can just move on to the next question.
Dan Burrows: I think, as I said, we weigh against all of the probabilistic outcomes, and I think if you think of the top end of our range, it'll be bang in line with the commentary you've heard from some of our peers.
Mike Zaremski: Switching gears to a lot of talk in recent months about property pricing, power decelerating, but still increasing and coming off of record levels in many cases is -- look, I'm looking at some of your RPI KPIs that are helpful. Is that kind of directionally, it looks like that's what you guys are also seeing? I don't think bespoke RPIs broken out as often, but what's your thought process and kind of pricing power in the overall marketplace?
Dan Burrows: It's a really good question. Firstly, on Bespoke, because of the nature of that product line, it tends to be more insulated against market cycles. So we do see some improvement in terms on some of those lines, but generally it kind of flatter as opposed to the reinsurance and the specialty. But when we think about market duration, it's still a best or pricing in the market. Still the best market we've seen for 20 to 25 years, we've had compound increases over the last three or four, five years. It's still a very verticalized market. So we've talked about this before. So not everyone starts in the same place. As a leader on across the portfolio, about 90% of the business then we're able to dictate terms, conditions, and we get better pricing, uh, better coverage. Obviously, we see the opportunities early as well. We're able to have a think, a better risk election on that basis, but we're still seeing positive movement. There's a lot of demand in the market and despite those secular factors that we've talked about, long and hard, climate change -- reserves, inflation, there's really been no new influx of significant capacity into the market, but inflation is driving demand and we've seen that. Having that lead line, that's scalable, it gives us leverage. We're important and relevant to the brokers and clients, and that's how we get the differential terms. That's what creates the alpha.
Mike Zaremski: And just lastly, on the share authorization, the stocks outperformed meaningfully since you announced that just and anything we should think about in terms of how you all kind of are going to pace it going forward based on valuation?
Allan Decleir: No, I think when we announced the program in the latter part of December 2023, it was a 50 million buyback program. We said we'd be measured, but at certainly add the values of our shares. It was certainly accretive to shareholders. I think given our current $21.22 book value; we could still continue executing on the program throughout 2024. It was a 12 month authorization, so I think the pacing was right, and I think we will be in the market if, depending on share price and whether it's accretive to book buy.
Operator: Your next question comes from Yaron Kinar with Jefferies.
Yaron Kinar: I want to start with the bespoke segment if we could. You offered some very helpful guidance last quarter talking about a pipeline that was relatively flat year over year. I think where there's still a bit of fluctuation is on the session rate there. And I'm guessing it's because the book is essentially all new as opposed to renewed every quarter, and therefore you can see pretty significant fluctuations. But is there any I guess guidance or rule of thumb you can offer us in terms of thinking of what a proper seating rate should be there? A and B, maybe you can talk about maybe the differences in the composition of the portfolio year over year that would've resulted in B change in session rate?
Dan Burrows: I'll start. I think specifically if this is about business mix and the difference in session rate this time was around, a cyber relationship that we had, and we buy a lot of proportional reinsurance on it. And Allan said earlier, we see that as a very fungible form of capital that helps scale our line. And really gives us leverage as a leader. But if in that particular instance it's because we're seeding out premium because of the scale of the proportional program that we buy on it.
Yaron Kinar: And is there a way for us to think about, like, is a 50% session rate a reasonable number to think about going forward? Obviously, there's going to be some fluctuation quarter to quarter, but just want to make sure we're thinking about it correctly.
Allan Decleir: As you mentioned at the start of your question, the Bespoke segment by its nature has some fluctuations on the business -- and they tend to be unique. They're not necessarily all renewals, but in general, we would go with the sort of 2023 overall yearly session rates, which we think of as more in the 40%, maybe as high as 50%. Again, depending on the type of deal, but it'd be more around the range of 40% session.
Yaron Kinar: And my second question, I realize this may be my third, but I'll try it anyway. The timing of reserve reviews this was a very significant release this quarter, I think the largest disclosed quarterly release that I remember. Can you maybe talk about what drove that specifically and maybe how you look at the reserves over the course of the year as well? What books are reviewed?
Allan Decleir: I'll take that question. From for context, I would note again that we do not write any casualty business. We are short duration company. Our average duration of our reserves is two years. As a result, we have always had a process of looking at our reserves on a timely basis, quarter-to-quarter. And so each quarter you'll see that we do release reserves or strengthen reserves based on loss activity for that particular quarter. We do not wait for a particular quarter or year-end reserve review. In Q1 2024, the activity in prior years was fairly benign across all three segments. And again, the results that would flow through are purely based on experience. There was no change in assumptions. It was purely based on the actual flow through of results for the quarter.
Operator: Your next question comes from Meyer Shields with KBW.
Meyer Shields: Dan, one first question, I just want to make sure I understand it. It sounds like the syndicate is going to be writing reinsurance as well. Should we assume that Fidelis is willing to take on more exposure in reinsurance through the syndicate in addition to whatever pricing momentum?
Dan Burrows: It's a really good question. As you know, we have a variable approach share, so we'll lean into lines where we do have appetite and, and where we have less appetite, we'll take smaller shares. I think we have seen some very positive movement in terms of pricing on the reinsurance portfolio. And as we said in the script, we've taken premium increases rather than exposure increases. So we're monitor it. There are, there are some deals that flow into Lloyd's and Lloyd's only that we'd like to have access to that. That's a whole, one of the whole purposes of the Syndicate is getting access to business. We can't originate now. But we'll stay away from attritional that's not really in our appetite. Depending on the risk, I think this is the key thing around the -- is that we get to see every deal. If it looks attractive we combined it. Uh, but if it's not with an appetite, we won't match our capital to those risks.
Meyer Shields: And then maybe on the flip side --
Dan Burrows: I think I just put out there that, -- sorry, Meyer, sorry to interrupt you. Whatever we say you that's going to have no -- whatever we do would have no impact on our kind of premium for 2024. It's a very small premium item for 2024.
Meyer Shields: With regard to the directing faculty book, I was hoping for an update on reinsurance purchasing strategy based on I guess current expectations for midyear property pricing, property reinsurance pricing.
Dan Burrows: Another good question, and actually very timely. So as you know, we buy a very broad range or suite of products both proportional non-proportional index and 1/1 is a very busy time as is 1/4. We tend to buy the DNF program there. It's coming within expectation. We've actually bought a bit more limit. You'll know we've just renewed the Herbie Re bonds, two tranches, 150 million or in total 150 million and that gives us protection for US name storm, and US quake. So as you know, as the portfolio's grown, then we'll look to take opportunity in the reinsurance market just to help us scale our line. Once again, being a leader in a verticalized market, especially like DNF, gives you a very, very differential result. And and we'll take advantage of that market if we can.
Operator: [Operator Instructions] Your next question comes from Mike Ward with Citigroup.
Michael Ward: I was wondering, just technical -- if the Lloyd structure of seating commission is comparable to the rest of the MGU sourced business?
Allan Decleir: I think overall, the Lloyd's expense structure is similar to how we have currently and I wouldn't expect any material change until our expenses overall as a result of the Lloyd's participation.
Michael Ward: And then there is potential, there's hurricane forecast coming out. Just wondering if you guys could remind us your exposure if we do see some of the relatively extreme forecasts.
Dan Burrows: I mean, we don't give out details on PMLs. As you know, what we would say, we are exposed at one and 150 to -- and then Southeast Clash, but we do, as I just mentioned, buy, we have a lot of proportional protection on that portfolio in both the Truity and the D&F. And we buy a very broad suite of products. We have non-proportional, we have index products, just renew the bonds, as I said a moment ago. So we think we're very well protected in that portfolio.
Operator: Thank you. This concludes today's question and answer session. I'd like to turn the call back to Dan Burrows for closing remarks.
Dan Burrows: Thank you everyone for joining us today. We appreciate your interest in our company and if you do have any follow up questions, we'll be around to take your call. So thank you very much and have a great day.
Operator: Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.
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