Pelagos leans into capital allocator model as market softens

Pelagos, which rebranded from Fidelis Insurance Group in May, is increasingly positioning itself as a capital allocator, backing external underwriting partners rather than maintaining class-level underwriting teams in-house.

Strickle (pictured) told GR the model gives the carrier greater flexibility to access underwriting talent and move capital between opportunities.

“What we view as being different about how we approach things and our structure, in particular, is we want to increase the amount of optionality we have,” he said.

“We’re able to back the top two or three best underwriters in a particular line of business because they’re all doing a slightly different job for us.”

The approach also allows Pelagos to focus on portfolio-level underwriting, assessing teams, opportunities and risk appetite rather than individual policies.

Its strategy has increasingly involved adding new underwriting partners alongside the Fidelis Partnership. Two years ago, effectively all of Pelagos’s business came through the partnership, compared with around 90% today.

“More than half our growth came from new partners last year. It’s been the driver of our growth this year,” Strickle said.

He added that Pelagos does not set a fixed target for how much business should come from other partners, avoiding pressure to shift capital simply to meet an externally stated mix.

Selective deployment

Flexibility is being tested as pricing conditions soften.

Strickle emphasised that Pelagos focuses on price adequacy rather than headline rate movement, asking whether expected returns still meet its capital hurdles.

Aviation has been one area where the carrier has pulled back sharply, seeing even rising rates as inadequate.

“The way I really think about the pricing for that, it’s almost priced to have no big events,” he said. “One big event, and you’re not hitting your return hurdle anymore.”

Pelagos cut aviation premium by almost 50% in the fourth quarter of 2025 and remains highly selective.

By contrast, Strickle said property catastrophe and direct property remain attractive despite soft market rate pressure.

Pelagos’s property cat loss ratio since its IPO has remained below 20%, including wildfire and hurricane losses, he stressed.

“Even if rates are off 20 or 30 points, that’s still price adequate business in our view,” Strickle said.

Asset-backed finance and portfolio credit have meanwhile been among Pelagos’s main growth areas, offering welcome diversification and a relatively stable source of returns.

Strickle said Pelagos has kept the same profitability hurdle as the market has softened, with fewer opportunities now clearing it.

“We haven’t lowered our bar. The market’s changed, so fewer things get over it,” he said.

That has slowed growth from around 20% annually in earlier years to 7% in 2025 and mid-single-digit expectations for 2026.

For Strickle, the aviation pullback demonstrates the advantage of Pelagos’s structure.

“To walk away from half of your book over one quarter, I think isn’t something that you see very often in the market,” Strickle said.

“We’ve still got the optionality to go back in. We could go back in with another partner next year. We could go back in with the same partner and bring some of that back to us,” he added.