Summary of Pelagos Insurance Capital Q2 2026 Earnings Call

1Key Financial Results and Metrics

Operating Net Income: $29 million, or $0.34 per diluted common share.

Annualized Operating Return on Average Equity (ROAE): 5.1% for Q2; 10.1% year-to-date.

Gross Premiums Written: Increased by 6% year-over-year to $1.3 billion.

Net Premiums Earned: $515 million in Insurance; $66 million in Reinsurance.

Combined Ratio: 99.5% for Q2, with a year-to-date ratio of 93.1%. Last 12 months combined ratio is 86.4%.

Book Value per Diluted Common Share: Increased by 23% year-over-year to $26.56.

Share Repurchases: $60 million in Q2, totaling $280 million in the first half of 2026.

2Strategic Updates and Business Highlights

Pelagos Insurance Capital is benefiting from its rebranding and a clear capital allocation strategy, leading to increased interest and opportunities.

The company is focusing on diverse underwriting partnerships, particularly in Property, Marine, and Asset Backed Financing & Portfolio Credit.

The firm maintained a disciplined underwriting approach, especially in competitive markets, and emphasized the importance of risk-adjusted returns.

Strong performance in the Property segment was attributed to partnerships with Bamboo Insurance and a selective approach to capital deployment.

The company is actively managing portfolio volatility and has a strong pipeline of new underwriting partnerships.

3Forward Guidance and Outlook

For Q3, net earned premiums in Insurance are expected to be similar to Q2 levels, while Reinsurance is projected at $130 million to $160 million.

The company anticipates continued mid-single-digit growth for the year, supported by its underwriting partnerships.

Management remains confident in achieving a combined ratio in the mid- to high 80s and an ROAE target of 13% to 15% for the year.

4Bad News, Challenges, or Points of Concern

The combined ratio for Q2 was impacted by a higher-than-normal number of large loss events, including significant losses from geopolitical tensions in the Middle East.

The competitive landscape is intensifying, with alternative capital entering the market, leading to pricing pressures in certain lines.

The company noted a bifurcation in the market, with lead markets performing better than follow markets, which may affect future profitability.

There is a potential risk of increased competition in the reinsurance segment, particularly as rates are seen to decline.

5Notable Q&A Insights

Management emphasized the importance of a disciplined approach to underwriting, particularly in volatile regions like the Middle East, where they have seen profitable results despite recent escalations.

The company is applying the same profitability thresholds to new underwriting partners as it does for existing ones, ensuring they meet or exceed performance expectations.

There was discussion about the impact of alternative capital on the market, with management noting that while it increases competition, it also enhances their outwards reinsurance program.

The company remains focused on maintaining its risk profile and capitalizing on opportunities in the Asset Backed Financing & Portfolio Credit sector, which continues to show steady growth. In conclusion, Pelagos Insurance Capital reported solid financial results in Q2 2026, driven by strategic partnerships and disciplined underwriting. However, it faces challenges from competitive pressures and recent large loss events, which management is addressing through careful capital allocation and risk management strategies.