REG - Conduit Holdings Ltd - January 2024 Trading Update

Conduit HoldingsAnnouncement

25/01/2024 07:00

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RNS Number : 8367A  Conduit Holdings Limited  25 January 2024

Pembroke, Bermuda - 25 January 2024

Pembroke, Bermuda - 25 January 2024

Conduit Holdings Limited

("CHL" LSE ticker: CRE)

January 2024 Trading Update

38% growth in estimated ultimate premiums written; positive risk-adjusted rate
change;

attractive underwriting conditions

 

CHL, the ultimate parent company of Conduit Re, a pure-play Bermuda-based
reinsurance business, today provides a Trading Update in relation to the 1
January 2024 renewal season.

Trevor Carvey, Chief Executive Officer, said:

"We are pleased to report a very strong 1 January 2024 renewals season with
estimated ultimate premiums written up 38% year-on-year. The quality and
structure of the business being written is exactly where I want it to be, and
our business platform is readily supporting our continued growth. We look
forward to capitalising on the high quality growth opportunities in this
market with much optimism."

Key highlights of 1 January renewals

•   Estimated ultimate premiums written of $582.4 million:

•    Increase of 38% versus the 1 January 2023 renewal season of $421.2
million

•    Very strong levels of renewing business with our key partners,
complemented by high quality new business

•    Attractive underwriting opportunities in property and specialty
resulting in increased weighting towards these segments

•    Continued selective approach to casualty lines to maintain stable
combined ratio expectations year-over-year

•   Further hardening of portfolio rate demonstrated by 3% risk-adjusted
rate change, net of inflation

•   Outwards retrocession programme secured successfully - no material
changes in our net PMLs at 1 January

•   Conduit Re continues to have a strong, legacy-free balance sheet and
is well placed to continue to grow in the current market conditions

Underwriting activities

The split of estimated ultimate premiums written by class of business at 1
January 2024 was:

 Segment    2024   %     2023   %     Year-on-year change %

            $m           $m
 Property   311.0  54%   197.3  47%   58%
 Casualty   101.4  17%   112.2  27%   -10%
 Specialty  170.0  29%   111.9  26%   52%
 Total      582.4  100%  421.4  100%  38%

Pricing

Conduit Re's year-on-year renewal business written at 1 January 2024 shows an
overall risk-adjusted rate change, net of inflation, of 3%:

 Segment    2024 January renewals  2023 January renewals
 Property   5%                     39%
 Casualty   -2%                    1%
 Specialty  2%                     14%
 Weighted   3%                     19%

These net rate changes reflect management's assessment of rate changes of
Conduit Re's renewed business net of the impact of claims inflation, exposure
changes and changes in any other terms and conditions.

Gregory Roberts, Chief Underwriting Officer, commented:

"Our 2024 renewals season was again characterised by a high level of renewing
business and positive rates in our property and specialty books. We continue
to see high submission levels of attractive business and, being selective
around lines, rates and structure, we continue to grow the portfolio
significantly without sacrificing quality. We saw more attractive risk versus
reward in the property and specialty segments and therefore we focused growth
in these classes over casualty."

Outlook

The January renewals represent a key renewal period for both the business and
industry and are considered a primary indication point for pricing in the
reinsurance market. The 1 January renewals period has shown Conduit Re's
ability to continue to grow the business in an environment of risk-adjusted
rate improvements in an already hard market. Conduit is well capitalised and
anticipates continued year-on-year growth.

We will announce our 2023 year-end financial results on 21 February 2024.

Webcast

Conduit Re's management will host a live question and answer session for
analysts and investors via a webcast and conference call on Thursday 25
January 2024 at 12.00 noon UK time / 8.00 am Bermuda time.

To access the live webcast, please register in advance here:

https://www.lsegissuerservices.com/spark/ConduitHoldingsLtd/events/1fbddde1-f68f-4075-b193-4800932a5bb2
(https://www.lsegissuerservices.com/spark/ConduitHoldingsLtd/events/1fbddde1-f68f-4075-b193-4800932a5bb2)

To access the live conference call, please register to receive unique dial-in
details here:

https://registrations.events/direct/LON68124
(https://registrations.events/direct/LON68124)

A recording of the conference call will be made available on the Investors
section of Conduit Re's website at www.conduitreinsurance.com from
approximately 4:00 p.m. UK time on 25 January 2024.

Media contacts

H/Advisors Maitland - Vikki Kosmalska / Genevieve Ryan

+44 (0) 207 379 5151

conduitre@h-advisors.global

Investor relations and other enquiries

info@conduitreinsurance.com

Panmure Gordon (Joint Corporate Broker)

+44 (0) 207 886 2500

Berenberg (Joint Corporate Broker)

+44 (0) 203 207 7800

Peel Hunt (Joint Corporate Broker)

+44 (0) 207 418 8900

About Conduit Re

Conduit Re is a pure-play Bermuda-based reinsurance business with global
reach. Conduit Reinsurance Limited is licensed by the Bermuda Monetary
Authority as a Class 4 insurer. A.M. Best has assigned a Financial Strength
Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of a-
(Excellent) to Conduit Reinsurance Limited. The outlook assigned to these
ratings is stable.

Conduit Holdings Limited is the ultimate parent of Conduit Reinsurance Limited
and is listed on the London Stock Exchange (ticker: CRE). References to
"Conduit" include Conduit Holdings Limited and all of its subsidiary
companies.

Learn more about Conduit Re

Website: https://conduitreinsurance.com/ (https://conduitreinsurance.com/)

LinkedIn: https://www.linkedin.com/company/conduit-re
(https://www.linkedin.com/company/conduit-re)

Important information (disclaimers)

This announcement contains inside information for the purpose of the Market
Abuse Regulation (EU) No 596/2014 (which forms part of UK domestic law
pursuant to the European Union (Withdrawal) Act 2018, as amended).

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "goals", "objective", "rewards",
"expectations", "signals", "projects", "anticipates", "expects", "achieve",
"intends", "tends", "on track", "well placed", "continued", "estimated",
"projected", "upcoming", "may", "will", "aims", "could" or "should" or, in
each case, their negative or other variations or comparable terminology, or by
discussions of strategy, plans, objectives, goals, targets, future events or
intentions. Forward-looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues, unearned
premiums pricing rate changes, terms and conditions, earnings, synergies,
economic performance, indebtedness, financial condition, dividend policy,
claims development, losses and loss estimates and future business prospects;
and (ii) business and management strategies and the expansion and growth of
Conduit's operations.

Forward-looking statements may and often do differ materially from actual
results. Forward-looking statements reflect Conduit's current view with
respect to future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to Conduit's business,
results of operations, financial position, liquidity, prospects, growth and
strategies. These risks, uncertainties and assumptions include, but are not
limited to: the possibility of greater frequency or severity of claims and
loss activity than Conduit's underwriting, reserving or investment practices
have anticipated; the reliability of catastrophe pricing, accumulation and
estimated loss models; the actual development of losses and expenses impacting
estimates for claims which arose as a result of recent loss activity such as
the Ukraine crisis, Hurricanes Ian, Ida, and Idalia, the European storms and
floods in 2021 and 2022 and, the earthquake in Turkey and wildfires in Canada
and Europe; the impact of complex causation and coverage issues associated
with attribution of losses to wind or flood damage; unusual loss frequency or
losses that are not modelled; the effectiveness of Conduit's risk management
and loss limitation methods, including to manage volatility; the recovery of
losses and reinstatement premiums from our own reinsurance providers; the
development of Conduit's technology platforms; a decline in Conduit's ratings
with A.M. Best or other rating agencies; the impact that Conduit's future
operating results, capital position and ratings may have on the execution of
Conduit's business plan, capital management initiatives or dividends;
Conduit's ability to implement successfully its business plan and strategy
during 'soft' as well as 'hard' markets; the premium rates which are available
at the time of renewals within Conduit's targeted business lines and at policy
inception; the pattern and development of premiums as they are earned;
increased competition on the basis of pricing, capacity or coverage terms and
the related demand and supply dynamics as contracts come up for renewal; the
successful recruitment, retention and motivation of Conduit's key management
and the potential loss of key personnel; the credit environment for issuers of
fixed maturity investments in Conduit's portfolio; the impact of the ongoing
conflicts in Ukraine and the Middle East, the impact of swings in market
interest rates, currency exchange rates and securities prices; changes by
central banks regarding the level of interest rates and the timing and extent
of any such changes; the impact of inflation or deflation in relevant
economies in which Conduit operates; Conduit becoming subject to income taxes
in Bermuda, the United States or in the United Kingdom; and changes in
insurance or tax laws or regulations in jurisdictions where Conduit conducts
business. Forward-looking statements contained in this trading update may be
impacted by the escalation or expansion of the Ukraine conflict on Conduit's
clients, the volatility in global financial markets and governmental,
regulatory and judicial actions, including coverage issues.

Forward-looking statements speak only as of the date they are made. No
representation or warranty is made that any forward-looking statement will
come to pass. Conduit disclaims any obligation or undertaking to update or
revise any forward-looking statements contained herein to reflect actual
results or any change in the assumptions, conditions or circumstances on which
any such statements are based unless required to do so by law or regulation.
All subsequent written and oral forward-looking statements attributable to
Conduit and/or the group or to persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements referred to above.

"Estimated ultimate premiums written" is the estimated total gross premiums
written (excluding reinstatement premiums) that is expected to be earned
assuming all bound contracts run to the end of the period of cover, after
management discount for prudence. "Estimated ultimate premiums written"
reflects underwriter expectations at time of writing and involves significant
judgement. Prior year comparative figures reflect those presented in Conduit's
previously published Trading Update and are not intended to present a current
view of underwriting year expectations for prior periods. We caution against
using estimated ultimate premiums written for anything other than
understanding how we view 1/1 on this basis in comparison to prior periods.
This figure is not representative of revenue recorded in the IFRS financial
statements.

The Conduit renewal year on year indicative pricing change measure is an
internal methodology that management uses to track trends in premium rates of
a portfolio of reinsurance contracts. The change measure is specific for our
portfolio and reflects management's assessment of relative changes in price,
exposure and terms and conditions. It is also net of the estimated impact of
claims inflation. It is not intended to be commentary on wider market
conditions. The calculation involves a degree of judgement in relation to
comparability of contracts and the assessment noted above, particularly in
Conduit's initial years of underwriting. To enhance the methodology,
management may revise the methodology and assumptions underlying the change
measure, so the trends in premium rates reflected in the change measure may
not be comparable over time. Consideration is only given to renewals of a
comparable nature so it does not reflect every contract in the portfolio of
Conduit contracts. The future profitability of the portfolio of contracts
within the change measure is dependent upon many factors besides the trends in
premium rates.

 

 

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