By David Bull

May 15 - (The Insurer) - Fidelis Insurance Group has settled or is in various stages of settlement discussions for around 80% of its total Russia-Ukraine aviation and aerospace claims exposure, with the carrier’s CEO adding that an adverse judgment in the English trial related to the remaining exposure would lead to a $150 million reserve charge.

Fidelis CEO Dan Burrows updated analysts on exposures related to lessor policy claims that are currently in litigation, after the company took a $287 million net reserve charge back in February.

Back then, Fidelis said that the carrier had at that stage settled or was in various stages of settlement discussions for around two-thirds of its total exposure to the “unprecedented events.”

Speaking after the company reported better-than-expected Q1 operating losses that included California wildfires that were at the low end of February’s estimate, Burrows highlighted further progress on settling Russia-Ukraine liabilities.

He said that after continued settlement activity, the company has now settled, or is in various stages of settlement discussions, for around 80% of its total exposure related to the lessor policy claims in litigation.

Burrows added that the majority of the remaining exposure relates to the English trial, for which Fidelis holds reserves based on a probabilistic model of potential court outcomes, with the outcome still pending.

“Depending on the judgment, we would expect an impact to prior year development. In the event of a favorable judgment, this would result in positive prior year development and would be reflected in the results following the final resolution of the legal process, including any appeals.

“Conversely, should we face an adverse judgment, we anticipate that this would result in a net adverse prior year development impact of up to $150 million, which would be immediately recognized in our results,” said the executive.

He said that following the results of the English trial, Fidelis will have resolved around 95% of the exposure related to lessor policy claims in litigation, “putting our exposure to this event essentially behind us.”

Burrows also told analysts on the earnings call that the carrier’s underlying portfolio continues to perform well.

“We remain focused on capitalizing on attractive opportunities to drive growth and optimize margin,” he commented.

Earlier on the call, he commented on a first quarter that had included the highest level of industry cat losses for the period in over a decade, along with global political uncertainty causing volatility in the financial markets.

He said Fidelis had remained focused on providing solutions to its clients and actively managing its capital, stating that the carrier is well positioned to navigate the current environment and capitalize on market conditions to generate good underwriting margin.

“More broadly, we continue to see an attractive trading environment supported by strong margins across all lines of business. After years of compound rate increases, we are still in one of the best underwriting environments I've seen in my career.

“While we have seen increasing competition in some lines, our portfolio is well diversified across over 100 lines of business, and our lead positioning, long term relationships, distribution channels and [line size] leverage afford us access to the most compelling risks at preferential rates terms and conditions,” said Burrows.

He added that as a short tail writer, Fidelis holds a differentiated position that is a “key advantage at all stages of the cycle.”

“And as a leader in a verticalised market, we are less impacted by the effects of rating pressure within insurance,” he said.