Fidelis Insurance Reports Significant Adverse Development in Aviation Claims
In a recent update preceding its Q4 and full-year 2024 earnings report, specialty insurer Fidelis Insurance Holdings Limited disclosed a net adverse prior year development in its Aviation and Aerospace sector amounting to $287.2 million. This development has notably influenced the company’s performance over the periods in question. The adverse reserve development concerns policies underwritten during the 2021 and 2022 underwriting years, with a significant impact stemming from ongoing aviation litigation related to Russia’s invasion of Ukraine.
Consequently, Fidelis anticipates reporting net income ranging from $100 million to $120 million for the full year 2024. Operating income is expected to be between $120 million and $140 million for the same period. Based in Bermuda, the insurer highlights its strategic efforts in settling claims to mitigate its exposure to aviation litigation. The reserve strengthening is partly to facilitate ongoing settlement discussions and reflect recent developments and newly acquired information.
To date, Fidelis has either settled or is actively engaged in settlement discussions for about two-thirds of the total exposure linked to lessor policy claims currently in litigation. Of the remaining claims, a substantial portion pertains to the English trial that commenced in October of the previous year. Fidelis continues to maintain reserves based on a “probabilistic model of potential court outcomes,” incorporating the latest developments and data received. The trial in England concluded on February 14th, 2025, with a court judgment expected in the coming months.
Dan Burrows, Group Chief Executive Officer, stated: “We have significantly reduced our overall exposure to the complex and evolving Russia-Ukraine aviation litigation, minimized the potential downside risks associated with this event, and provided increased certainty to our shareholders. Excluding the prior year development impact in our Aviation and Aerospace line, our annual results would have surpassed our long-term Operating ROAE target. Our balance sheet remains robust, positioning our business to support future growth and deliver long-term shareholder value.”
Separately, Fidelis announced a preliminary estimate of catastrophe losses from the January 2025 California wildfires, ranging from $160 million to $190 million. These figures are net of expected reinsurance recoveries, reinstatement premiums, and tax. The firm confirms that these losses will be reported in its first quarter 2025 earnings, based on an insured industry loss estimate of $40 billion to $50 billion.
