Conference Transcript - PLGO 2026-09-10

Speaker 3

Good afternoon, everyone. We are going to move along. I know there's been a great deal of demand. People want to watch a conversation between two actuaries, so this is your chance. I do want to welcome Johnny Strickle, who is Group Managing Director at Pelagos Capital. Let me start with any opening comments that you want to make in terms of how you're seeing the world nowadays.

Jonny Strickle, Other

Yeah, thanks, Maya. I think, you know, we've had a really exciting year trying to build out our story as a capital allocator, executing on the model that we've set out over that period. There's probably a couple of areas I'd want to touch on before we kick off. The first one, one of the things we've really been thinking about a lot is optionality and access to risk. I think as a capital allocator, it's one thing working out where and how you want to allocate capital. But if you don't have access to that underlying source of risk, then you can't execute on that strategy. So for us, you know, our cornerstone partner, our first partner was the Fidelis Partnership. They write over 100 lines of business. That gives us a great base to work from. We're continually trying to innovate with them. I think one of the more recent examples would be around data center risk, where we look to engage on the construction side there, building up different sources of capacity with them so we can go with a meaningful line size, benefit from the leverage you get by having a meaningful line size while not over-allocating ourselves in terms of net line ourselves. There's one example with them. Obviously, we've had a real focus on building out to new underwriting partners as well. and some of the examples there Euclid Mortgage we previously had great success with the European Mortgage Book with the Fidelis Partnership. Euclid Access US Mortgage Market which historically has been really difficult to get into especially from a reinsurance point of view so again that's given us more options to access through. I think the more different ways we can access market the more different lines of business we have or access to different elements of a line of business that we're already in gives us more optionality to be more resilient as the market changes. So it's been a real focus for us i just arrived here from monte carlo yesterday and i have to say working through with potential partners existing partners there the pipeline we've got over the next couple of years is really really exciting lots of innovative teams there we've said before we turned down you know over 90 of the risk we see but even with that stat i think the amount of opportunity we see is really exciting for us the other thing i touch on which i think is key to being a capital allocator is is agility i mean our model is purpose built for agility got options different top tier underwriting teams people accessing different bits of the market at different times and us being able to move between them as the market moves gives you real flexibility again if you've got an idea of how you want to allocate your capital you've got the access to market but you don't change with the market then i think that puts you at a big disadvantage A couple of examples of us being agile over the last year that's been really exciting for us. One is we pulled out of the aviation market 50%. As soon as we determined that that wasn't hitting the hurdles we need, we took action to correct that. On the opposite side to that, there was opportunity post the start of the conflict in the Middle East to go in and write a niche bespoke book, picking certain risks that hit the hurdle, staying away from others, going in the market where we saw opportunity, pausing where we saw uncertainty and going back in with a different risk appetite where appropriate you know that business has run at a sub 20% loss ratio and been really great for us giving us a real boost into the year so being agile all the time something that's really important to us so our whole thought process over the recent period has been about those two things expanding optionality being agile to move through where we see the best opportunity at a particular time and I think that's what gives our business the resilience to move through market cycles

Speaker 3

That's fantastic. What I've been saying for a long time is that the indicators of the market cycle from Monte Carlo suggest some level of softening, and I think that offers a great context for what we should be expecting from Pelagos going forward. One of the main themes of this conference that I've been trying to get is to have companies explain in as concrete terms as possible their AI-related priorities and how we on the outside are going to see them in the financials and maybe when. And I thought you could talk a little bit about where Pelagos is on the AI journey.

Jonny Strickle, Other

Yeah, we're a reasonably new company, so we don't have legacy data. We don't have legacy operation systems. We're also structured in a way where some of that burden is taken over by our underwriting partners rather than us. So I think what you won't see is big efficiency changes and reductions in expense ratio because we never had bloat in those areas to begin with. That's not something you're going to get from Pelagos. The way we look at what AI is doing for us is it's giving us more time, and it's giving us more time to spend on making high-value strategic decisions and executing on them. So some examples of that, we use AI to process data, we use AI to come up with the first view of analytics and analysis out of that data, and then we use AI to iterate on that. So that buys the management team, for one, gets better, higher-quality information to base their decision and strategic thinking on. but it's more than that it cascades down the business some more junior members of our business now are also getting time to think strategically and one of the things at Pelagos is I think diversity of experience in our leadership team has been one of our greatest strengths I think my background's actuarial as you say I've come up through that Dan's background so our CEO is as opposite as you can get to that I think he's come up through the broking market senior positions in Aon and just to get just our two perspectives together that's that's really diverse you know you can add up our years of experience but it's more that those years are in completely different areas add on our CFO our CRO and other people that diversity of experience really shines through when we think about underwriting opportunity so to take some of the more junior members of the team throughout the organization and add their experiences in particularly since they started their careers their whole life experiences in a different world to ours has been really useful and bringing that back to ai that extra time that we've got through the entire organization has let more people contribute to the strategic thinking now you want to concrete examples then no surprise that i i don't know what the others have given you but that's unless it's on expenses it's very hard to do what i see it doing for us is improving decision making and strategic thought throughout the business so that materializes with a better combined ratio a better return than we would have had it gives us more time to add optionality as i said earlier build a more robust business think about how we're going to navigate market cycles so i think it improves the business and will improve the results um you know it's a consequence of that but it's really difficult to split out of our result how much was because of that extra time how much would you have had anyway right no that's perfectly fair but i think just having the context and talking about i'll say it i mean in my own terms improving underwriting decision making and what that means so that could be faster growth it could be lower loss ratios but isolating that event is obviously going to be close to impossible but broadly speaking we should see that as a trip yeah lots of people in our industry talk about how you know it's specialist it requires expertise it's very difficult to disrupt the underwriting process in specialty with AI directly I do think that's true at least with AI in its current form but it can enhance the existing underwriting process and I think people that embrace that earlier are going to make better decisions than those that don't.

Speaker 3

Okay, that is very helpful. I had a related question on AI, and I'm thinking obviously there is the bifurcation of Fidelis into Pelagos and Fidelis partnership. There's a great proliferation of MGAs. There's this thesis in Monte Carlo, or not the thesis, this observation of additional capital coming in for casualty sidecars. It seems like the insurance industry is becoming more modular. In other words, you've got expertise in underwriting, There's expert capital over there. There's expert claims handling over there. How does AI fit into all of that?

Jonny Strickle, Other

Yeah, in terms of becoming more modular, when we thought about bifurcating the business, the idea, as we've articulated before, was about having people spend more of their time doing what they're good at. So the underwriting team focus on executing the underwriting strategy on a risk-by-risk basis. They have more time to risk-by-risk, push pricing, push terms and conditions, innovate, think of new product lines, meet the brokers, and concentrate on that. we sit back and manage at a portfolio level so we have more time to think about the macro strategy what lines of business where are we getting the best risk return profile for our capital allocations how should we think about things like buybacks versus deploying to underwriting and that's been a great benefit we think we've generated more alpha thinking about macro topics they've generated more alpha executing on the day-to-day and the sum's been a more robust business that performs better I think if you extrapolate that I mean some other carriers it may not be as direct the modulation but they take investment off hand that over to someone else let them concentrate on that while you concentrate on underwriting I can see that becoming a trend maybe other companies looking to take the underwriting and the investment out it's more challenging then because the person sitting in the middle of trying to balance those two macro risk allocations investment and underwriting and the more detailed bit at the same time but I can definitely see that happening i think where ai could disrupt in there is some other of the more vanilla aspects of a business and maybe the operations the claims handling the reserving you could see ai really interrupting in that space now people could build out their own solutions and people are definitely trying to do that but to me it makes sense that you would have a company come along that specializes in that really get a build up a niche business there and then interrupt that space in a big way. And people would not just break that out for the efficiency gains. They break that out so they could concentrate more on what matters to the business, the risk selection, the underwriting, and less on the operational aspects. So I definitely suspect that AI will lead to an increase in how modular businesses become with a breakout of some of those more operational related services. Great. Thank you.

Speaker 3

I do want to look around the room if you have questions. I want to make sure that everyone's getting the information that they want. So if do please just raise your hand we'll get you the microphone and you can ask. I often find myself in the situation where I'm interviewing executives and I basically invite them to explain what the sell side is doing wrong so I'm going to do that now also. How well do you think that U.S. investors because you're trading in New York understand the volatility inherent in your book of business?

Jonny Strickle, Other

Yeah I think the understanding there has really increased in recent periods partly because we've had some volatility that we've had to explain right like the theme that we've tried to get over to investors is that our business if you judge it on a quarter to quarter basis will have volatility within it you see that this year q1 we had a great result down in the low 80s q2 but we had a result that had a high combined ratio with it what we want to get across to people is is we care deeply about volatility but we think about it a bit differently we think about it on minimum a 12-month period. So I think if you take just the six months this year, Maya, we have one large loss in Q1, great result. We had five in Q2. My expectation for the year would have been six to eight for the half year. So it's like we've had some quarter-to-quarter volatility, but on the half year, actually, we're bang in line with where we'd expect to be. I think in addition to that, one of the great tools we have to help control volatility is outwards reinsurance. But you really can't judge that on a quarterly basis. If you think about an aggregate contract that operates on an annual term so you have your difficult first half of the year and an aggregate protection in place you expect less volatility in the second half of the year that doesn't come across in your half year results right so i think it's our job to one communicate clearer how we think about volatility and two to look at areas where we do think it's appropriate to reduce and where we want to reduce volatility we'd look at a couple of things diversification i think is a great way to reduce volatility we look volatile sometimes because we don't have a big casualty book sitting on the side we're just writing short-term business so if you have a property loss our loss is bigger relative to our overall x because we have no casualty book than many of our peers right so again it's thinking about things like that thinking how do we add diversification to reduce the effect of that it's outwards reinsurance use as well you know as the market becomes softer you may expect a lower mean return but there's more tools to reduce the volatility associated with that we bought aggregate protection in our property cap book last year that hadn't been available at all in the hard market we bought an aggregate stop loss to protect more risk losses in terms of large loss frequency coming through again no chance we could have got that a year before and if the market did continue to soften those options to protect volatility become wider and wider on the outwards reinsurance front so i think that the the investors are are starting to understand that. But we'll do more in communicating that and giving as many examples as we can on the things that we do to reduce it.

Speaker 3

Okay, fantastic. I want to shift gears a little bit. One of the points that Dan emphasizes a lot is that Pelagos is the lead or the Fidelis Partnership is lead on 90% of the accounts that you write. And sometimes it's hard for us to understand. That's, if I would put it differently, that's a Lloyd's term. And I'm not sure that it's as familiar in the US. Can you flesh out what the concrete advantages are to having that lead position?

Jonny Strickle, Other

Yeah, I'll start with the easier positions. One of the metrics we track is our differential to the market price. So how much more we get paid for the same risk than anyone else. We don't disclose that publicly, but there's a significant margin there. And I think the easiest way to outperform before you get to risk selection outwards any of it is to just get paid more for the same thing than anyone else now why would someone pay a lead more elites coming uh with input into how you price the risk structure the cover elites putting a significant line down to kick off the process of getting syndication behind that risk um that's why we aim to lead in most of the lines of business that we write the fidelis partnership leading over 90 of the business they write and it gives you that leverage to drive pricing it also gives you leverage to drive terms and conditions which to us are just as important as pricing playing in the parts of the program that you want to play getting a different set of coverage restrictions to some others excluding things that we're particularly worried about in the tail with loss ratio caps with exclusions for particular types of exposure those are just as important to us i think as the market's changed the difference between lead and follows become more pronounced because it's changed access to risk what we've seen in the last year is some follow lines if you just had a small line particularly in the property market you now don't see all of the business because you're not needed they can feed it with lead and larger line capacity so if you're seeing less of the business and you still want to maintain the same size you're having to access in a different way so we see in property people come back and write the risks that we write as faculty of reinsurance of us so that means you know if you and this is why you get variation in how the press report rate change i think we might see for example 10% off on the slip we then fax some of that out at a greater rate reduction to what we just received and our 10% becomes 8% off and someone else has got 20% off now on exactly the same risk and that dynamic doesn't exist at all when the market's hard because there's plenty to go around for everyone but it's really started to come out in the last year and if the market didn't change in property I'd expect more of that into the next year So again, going back to my first point, even if you know the best portfolio to write, if you don't have access to it, you can't execute it. Being a lead gives you that access, and it gives you preferential pricing and terms on top of that.

Speaker 3

Okay, that's fantastic, and that clarifies things, I think, greatly.

Jonny Strickle, Other

Are there any trends that you can communicate in terms of how it's hard to get much better than 90, but how that's developing, or maybe trends in the gap of pricing? um we i'd always expect that to be high for us so i'll perhaps take it a slightly different way and tell you why it's not 100 there's there's some lines of business where the where you take a lower premium and right higher volume of risk that just doesn't work to be a lead market you know it's much more about industrializing the process of binding those binding those slips and again that is actually an area of the overall business that can be disrupted by ai at some point the future because it's so mechanical so those are the lines that we wouldn't lead those are the type of lines where we don't see the same advantages to leading because it's more premium

Speaker 2

you can't change the terms and conditions you can't get a differential pricing and effectively it just becomes more admin heavy to lead right okay no that's very very thorough uh and again if there are questions please raise your hand what uh sorry go ahead it's coming yeah your thoughts on the data centers is that an opportunity or not and if you do think data centers are an opportunity how large do you think it is for the industry overall and for yourself specifically yeah that's a great question um in terms of data centers we are very boring

Jonny Strickle, Other

people so we ensure the construction risk and i think data centers being an opportunity for us is because data centers are the thing that most of the construction budgets going on at the moment It's not the fact that data centers, it's the fact that people are building a lot of them at the same time, if that makes sense. That's a big opportunity, but these are absolutely enormous projects. So what we found with that is if someone wants to buy $5 billion a limit, even if we have a reasonably large line size, say $100 million, you're not really relevant to that slip. It's difficult to even get a seat at the table when you're doing such a small percent of the overall. so for that we worked with the Fidelis partnership for them to stack other capital sources up along with us so that we could go with a much more meaningful line size get a seat at the table negotiate terms and conditions and protect our line by keeping to the level that we're comfortable with there's the so that's how we got on the construction risk and how we built that portfolio and it's been a driver of growth in the last couple of years there's lots of other risk associated with this in terms of getting the chips in ensuring business interruption if they shut down ensuring the chips themselves ensuring the energy assets coming in for us right now we don't feel that we've got the expertise in valuing some of those assets understanding how their values change if there's a disruption in the supply chain to underwrite that appropriately so i think that could be an op that's certainly an opportunity for the market it's not a space that we'd want to play in at the moment because there's just not enough data to evaluate the risk properly do you have any sense of how large an overall market opportunity is it is so aside from just the entire market yeah it's it's i won't give you a number on that i think it's it's an enormous opportunity if you factor in the chips and the business interruption and the energy source supplying it i think but how much of that they can get anyone comfortable with to provide an insurance solution for is a really big uncertainty for me also if you think about the type of entities building data centers some of these are enormous companies that don't require insurance they can either retain the risk themselves insure through one a captive or find a different approach to it so i would say in terms of economical development it it must be the biggest opportunity that we see right now how much of that translates into insurable risk i think is difficult to say, and how much of it translates to insurable risk that we would want to take on as Pelagos is even more difficult.

Speaker 2

Thank you.

Jonny Strickle, Other

Thank you.

Speaker 3

So I'm going to move to another sort of hot topic, if you will, besides data centers, the Middle East, where the agility of N, so 20% loss ratio are things that you've highlighted before. Can you update us on the current, I know that things change all the time, but what are the current risks and opportunities based on today's political environment?

Jonny Strickle, Other

Yeah, again, it's an area that we try to be as boring as we can in. So we saw an opportunity there to help get commerce going again post the start of the conflict. We knew that there would be a really differentiated risk profile, and it would require looking at each risk, each ship, each site, risk by risk from the start. so to give some examples we thought you say a chinese flagged vessel not going through the strait was probably an insurable risk because it was only going to get hit by accident it wasn't going to be the target of of a strike whereas being frank we thought you know u.s friendly assets sailing through the strait for us was an uninsurable risk and probably remains so the same on the pv side you know if it was an sme company nowhere near a u.s air base is probably only going to get hit by accident if it's a big high-rise tower in the middle of a city much more at risk and probably uninsurable for us so picking through what we think's a good risk what we think isn't what we think's priced very well and what we think less so it's how we've approached it and i think unless you're willing to do the work of underwriting at that level it's really difficult to deploy into a live conflict situation um we amended that we set that appetite within 24 hours of the conflict beginning because i think if you're first you get a pricing advantage you also get a data advantage and a relationship advantage you know you're there to solve problems at the start the brokers appreciate that they remember you as more people join the table later you build up more information about the risky and less risky areas and again build up your information to set your underwriting appetite and then we updated it originally or pretty much every day as we learn more information you know as things quieten down that probably changed a weekly process At periods during the conflict, we've completely stopped underwriting and then gone back in in select areas. We react as the situation changes, and I think that will continue. Right now, it's the same thought process we had at the start, right? We want to write risks that we think aren't going to be active targets, are going to more be incidental damage from trying to target something else. It's just exactly what that pool of risks is changes over time.

Speaker 3

Okay. On a related note, how does the current global political violence terror marketplace look? Is this a year where you can expect above average profitability, below average?

Jonny Strickle, Other

I know there's volatility, I know there's uncertainty, but your overall appetite for that risk in the current market? yeah i mean that's a great question i'll give you a pelagos specific answer first and then think about the market i i think for us we've got two competing things right a significant portion of our book relative um to the overall comes from war premium we have like five to ten percent share of the war market we don't have five to ten percent of the insurance market's capital right so clearly we have an outsized play in that versus something else i think that's been a great decision for us we've written a billion dollars of war premium since 2023 sub 20 loss ratio and that includes losses that we've picked up for the middle east but if you have a year with a major conflict in and you're skewed to war business then you are going to have more loss experience coming through you look at our half year combined ratio it's 93 somewhere around there we'd hope to typically between mid to high 80s so we've had a higher combined than we want the main thing to point out for that is the fact we've had a major conflict and we're overweight there um but if you think about the opportunity that we discussed that's come through that's offsetting that to some extent because we've gone in and written a decent sized book of post-conflict business at very elevated rates and when i say elevated rates i mean we're being paid 20 times what we would have been paid pre-conflict for what and as i say we're trying to pick up pretty vanilla risk within that so the profitability on that as you sub 20 loss ratio we've seen on that so far is help offsetting to some extent i would say on balance by the end of the year you know it's going to be even for us a higher combined ratio year in that class than a typical year just because the fact we've had a major conflict i think if you look at the market overall um we've we've had a lower share of the market loss than our market share suggests by quite a bit the market as a whole i think will have a pretty poor combined ratio in those lines we're talking people are talking about three to four billion dollar uh event four billion plus now so that'll be a really significant loss on those lines of business and how people approach post-conflict isn't evenly spread either so there'll be some people that picked up a big loss and not written any post-conflict business because they're not equipped to do it sort of on a risk by risk basis so so we think for us you know it would be a difficult year but perfectly manageable in 93 versus 89 when one of our biggest exposures has had a live conflict I think is a really good result and how we've done versus the market I think is a really good result but it's certainly going to be challenging for the classes as a whole okay and in some ways I don't mean to gloss over what that means but that implies a longer duration opportunity at least in theory yeah in theory the reason I hesitate there is is what you see at the moment is an abundance of capital in in the industry i think eager to find wherever they think the next opportunity is going to be i think war is quite a nuanced line of business where you need real expertise to deploy effectively and so there's a bit of a higher barrier to entry to come into that but you know if rates go up i would expect more people to try and try and move into that line so i remain hopeful that rates adjust for the longer term but if you look at the rating environment posts and big losses we've seen recently we're just not seeing that come through the moment and i think that's because the abundance of capital take aviation for example the whole series of losses large war losses from russia ukraine and then war rates were going down you know you look at the marine market and baltimore bridge things like that and war rates really marine rates really not coming up from that so we're hopeful that rates will adjust appropriately given the risk profile but um we're not going to hold our breath no that's fair and i guess I should caveat that in theory with this theory.

Speaker 3

It doesn't work out well. So thank you from there. If you take a step back, in the context of geopolitical uncertainty, I'm trying to understand how the various asset-backed finance lines perform, both in terms of demand and in terms of loss experience.

Jonny Strickle, Other

Yeah, I'm a negative actuary, so I'll start with the risk one first. Okay. We've written those lines of business pre-bifurcation since about 2015. So that means we were writing you know financial cat exposed business over covid for example really big shocks over the interest rate rises we've seen over the last few years so when we write that that that type of scenario is the kind of one we would use as a stress right and we've been through two different periods of that over the period we've written it and picked up pretty much no loss as a result of that so the first thing i'd say is we really feel like that that portfolio is quite deeply stress tested um and ready to to to uh be resilient through any economic changes in in terms of demand i don't see it as much in those lines as a driver of demand movement we tend to see steady demand increase in their year by year more because we're expanding the clients that are accessing those products so if you're writing a capital relief product for financial institution more institutions more geographies are starting to utilize that product to get the efficiency if you're writing the other side to asset-backed finance we really see that as providing insurance to facilitate a transaction so you need a loan to buy a plane you can't get the loan without us insuring it therefore the transaction doesn't happen without the insurer again there's been a steady uptick as people use insurance more and more in those spaces to enable more transactions to take place that for me has been the real steady driver of demand increase rather than fluctuations in the the economic environment okay should we worry that there's some other stress then to which these lines are vulnerable if it's not covid if it's not spiking interest rates maybe there's some other black swan yeah i i mean these lines came about at least for us after the financial crisis right so that means is that gives you a great set of results to regenerate and say i don't want to have a loss in that set of scenarios again So I think it's a tail-type event that exposes this type of exposure. But you find with something like COVID that if you're too far in the tail, then there's no loss at all because there's government bayouts and something changes. So there is risk there. The risk is certainly pretty far in the tail because we've had no losses in extreme scenarios recently. What we do to gain comfort with it is, one, I think diversification is key. be spread your risk geographically spread your risk by client base so who you're offering the insurance products to spread your risk by product so doing some srt some mortgage lots of different things in there and spread it by where you're attaching the curve some stuff right in the tail some a bit in the tail some a little bit more in the money so you get a bit of a spread between the the different buckets there i think that's a great way to build resilience in the portfolio to face anything.

Speaker 3

Okay.

Jonny Strickle, Other

Excellent.

Speaker 3

I want to move on to property because property is a significant line of business. The cycle has been softer or more abrupt than a lot of insurance executives anticipated. I guess I would quote Pat Ryan here, who said he's been surprised by this. And Pat Ryan has seen a fair number of cycles and has insight into that. What is your view? What is Pelagos' view of what that faster than historical softening means for the duration and maybe the amplitude of the cycle from here?

Jonny Strickle, Other

Yeah, I mean, one thing I'd say on that is I think we probably hit a higher peak maybe than in some previous cycles. We saw compound rate increases from 2019 all the way up to 24, something like that. And by that point, when we think about pricing and rate adequacy that was our most profitable line of business property direct which which is really incredible when you think about some of the other risks that we take where you're getting paid more than just the risk transfer premium say an asset backed finance i think it got to a place where it was very very well priced then lots of extra supply came in and the rates fell off but i suspect people view it pretty similar to us which is through the lens of rate adequacy not rate change so i'm not surprised that it came off as much as we saw it come off which isn't as much as you see reported but still a reasonable rate of decline because even as we look at the market now you know we see plenty of pricing adequacy within it so i think it's probably that effect of getting up higher maybe than in some previous cycles and then having more room if you like as the market changed the other impact is sort of the um the leveraged impact i described earlier where i think if you if the biggest rate increases and then you find the biggest rate decreases you get the biggest rate of change sure i think someone said to me that someone had mentioned during the monte carlo conference that rates were back to where they were in 2017 which i thought the only way you could conclude that is by picking the high point and the low point and taking the difference and trying to trying to make that argument i think for me i thought that's quite easy to disprove look at the loss ratios in 2017 look at everyone's loss ratios now it's short tail it comes to in six months you've gone from something that's probably over 100 in 2017 to something running for us well sub 40 right now that is not the same rating environment you know that just just doesn't make sense as we look at it um so yeah i think there's that effect of exaggeration in terms of how much the movement's actually been to the point i made earlier you know the rate's off 10 and we fact it to someone that means the rate's off 8 for us and 20 for someone else so if you then put 20 in the press and then you do it next year and the year after all of a sudden you get very far away from the rate change we see.

Speaker 3

Okay, no, that clarifies things tremendously. I would argue 2017 had a little bit more adverse weather. Mother Nature was in a bit of a worse mood then, but I take your point. I assume you're adjusting for that.

Jonny Strickle, Other

Yeah, even if you take the cat out of it and look at the risk losses over the risk premium, I think that's kind of, it might not be 110 then, but you look at the difference between those two periods, you see that same effect.

Speaker 3

Okay, no, that clarifies things tremendously. Second quarter reinsurance actually had very strong growth. And the response to this will probably involve some of the difference between rate declines and rate adequacy. But I thought you could talk about what business you wrote in the second quarter of 26 that you didn't in the second quarter of 2025. What improved there to warrant the growth that you put up? This is in reinsurance.

Jonny Strickle, Other

Yeah, there's probably two themes to that, I would say. One is um we wrote more quota share business i mean historically we've we've written almost all excess of loss business in that line of business we thought that's where you got the best value the best contribution to our risk reward profile if you write quota share you can access the underlying direct writers rate change and what we'd seen is the people getting direct rate increases and then getting decreases on their outwards reinsurance excess of loss program so we wanted to participate in some of those rate increases with the direct writers which you can do through doing quota share we saw more opportunity to do some of that in the quarter so there was a little bit of that in there the other factor was there was a couple of geographical areas i won't say exactly which ones where we wanted to see how um changes played out so legislative changes other changes and whether they had the impact that people thought they were going to so those were areas that we were underweight on last year as part of our portfolio as we got comfortable this year with those changes we brought them up to equal weight right so it's not that we've gone out and found a particularly attractive area of risk that we've gone overweight and it's more getting the comfort to bring some other bits up to equal weight okay no that's that's very clear looking forward i know this is a little bit tricky um i was hoping you talked about your expectations for maybe the second half of 2026 or i i think the name change of the company was intended to signify some sort of evolution uh and i was hoping you share your thoughts on what that means for uh growth going forward yes so in terms of expectations i i mean most of our growth last year and the majority this year have come from our new underwriting partnerships going back to what i said at the start i don't think that should be a surprise to people because those are places where we can add diversifying different risk a new point of access to the market so euclid in the u.s market bamboo doing homeowners where that's not something that we've been in typically and there's lots of other examples of that so looking forward i also think new underwriting partners will will be the source of our growth at least in the near term just because it's easier there to add new things we don't have access to at the moment new underwriting partners tend to be on a portfolio level basis and most portfolio level deals will incept at 1-1 or the first half of the year so i think our growth will be more that book will be more q1 book than the rest of it so you get some temporary distortions in growth but quarter by quarter that being said we're on for mid single digits this year you know we're up somewhere in six seven percent for the half year so well on track for that and with the pipeline that we saw at Monte Carlo they're very confident in delivering on that everything into 27 I think it's too early for us to give a firm guide on there but you know I would expect us to continue to grow I mean with a pipeline that we see and unless the market comes off significantly there's plenty of rate adequate business opportunity to diversify and make the portfolio more robust that we'll execute on in that period in terms of you know the rebrand and and the name change i think that's been great for us i mean we ipo'd we then got two or three years to really work out who we wanted to be what we wanted the story to be and by the time we rebranded we knew what we were doing where we were going and who we were so we could put the whole brand around that I mean we always get all the taglines of the partnerships that matter make the connections they all associated with what we're trying to build out as lots of different touch points to risk allocating amongst them depending on where the market is so for me the brands let us get across what we're trying to do much clearer it's giving us a great point to reconnect to brokers and investors and explain the story again and exactly what we're about and that's translated into an uptick in pipeline business that we've seen no doubt about it we've had more meetings the meetings with brokers have got to the point of our risk appetite much quicker um and it's been a real success story for our business okay fantastic can we get a little color on not necessarily numbers but how the most recent partnerships have been working out relative to your expectations yeah i mean we we said when we moved away from the fidelity sponsorship to look at new partnerships alongside them that they set a very high bar in terms of performance you know the team there have got a 40-year track record fantastic combined ratios over the whole period and delivered great results for us and we wanted our new underwriting partners to meet or beat that hurdle otherwise there was no point in doing them we may as well allocate more capital to the fidelis partnership right so we set a very very high bar really pleased that as the performance has earned through for those you know it's been beating those expectations that we built up in terms of profitability also with our partners we said from the start we want scalable opportunities over the long term we only want 20 to 30 partners because a core advantage in our business is the entire executive team is involved in every partnership every opportunity every new avenue we go down comes back to the executive team to review and i think where we've seen things go wrong with any level of delegation in our business is when you stop um having that level of involvement at the level of seniority that's necessary so 20 to 30 partners is is is the right number for us to go to on that i think okay is there a timeline that you've disclosed or that you've got in mind all i can say on that i think is that it's been the key area of growth for us over the last couple of quarters and i think it will continue to be in the near term we're about 10 from new underwriting partners now 90 from the fidelis partnership and i certainly see that split swinging more towards new underwriting partners over the next couple of years the reason we won't set a firm target is we want to be agnostic to the fidelis partnership or other partners and we want to only care about where the best opportunity is so the middle east is a great example the fidelis partnership with the best partner to execute that opportunity for us and we wouldn't want to artificially choose between partners because we've set a pre-goal so it'll definitely be more it's definitely the core area of our growth but we haven't put firm numbers around it okay and then this i think will be the final question and this wouldn't happen between euclid and bamboo for example but how do you monitor the risk of good partners not competing with one another at the expense of your balance sheet that's a really great great question obviously when we thought about from when we embarked on on the mission to try and find new partners i i think going going back again to my first point of one of the key things we want is options to access risk in a different way so one of the criterias for a new partner is they have to do something different to what we can already get to so that kind of removes them directly clashing with each other almost automatically again think about euclid they're in the us tfps in europe bamboo they're in homeowners tfps in ens and that's true across almost all of our partners there is in our industry if you underwrite a portfolio level an inevitable level of clash at some level you know a bit of someone's book's going to overlap with a bit of someone's book somewhere else and i think that's unavoidable but it's certainly the minority of the partnerships we do where we do have a clash we we deal with it through a few different ways explicitly excluding it from the new underwriting partnership i you can't do it if this other person does it on a risk by risk basis or we tackle with outwards reinsurance or we tackle it with reduced line sizes when we come into that situation so we've got the tools to manage the exposure but i would say because at a strategic level writing business that directly clashes with what we've already got doesn't make sense to us, then it comes up as less of an issue as we go through.

Speaker 3

Okay, phenomenal. With that, we've come to the end of our session, so please join me in thanking Johnny for a tremendously informative session.

Jonny Strickle, Other

Great, thanks, man. Thank you very much.