REG - Conduit Holdings Ltd - Trading Update for Q1 2025

Conduit HoldingsAnnouncement

14/05/2025 07:00

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RNS Number : 5464I  Conduit Holdings Limited  14 May 2025

Pembroke, Bermuda - 14 May 2025

Conduit Holdings Limited

("CHL" LSE ticker: CRE)

Trading update for Q1 2025

Continued premium growth across all segments

Neil Eckert appointed Chief Executive Officer

Board approves buyback programme of up to $50 million

CHL, the ultimate parent company of Conduit Re, a multi-line Bermuda-based
reinsurance business, today presents its trading update for the three months
ended 31 March 2025.

Neil Eckert, Chief Executive Officer, commented: "I am honoured to accept the
role of CEO and look forward to continuing to work with the talented team at
Conduit to deliver on our objectives. During the quarter we have continued to
see attractively priced underwriting opportunities and as a result have driven
growth across all our divisions, delivering a 15% increase in gross premiums
written. Our growing, high quality investment portfolio has also performed
well with a 2.1% return for the quarter.

The experienced team at Conduit have effectively navigated one of the most
challenging quarters for insured catastrophe losses in history, taking
decisive action following the devastating California wildfires to enhance our
resilience and reduce earnings volatility for the rest of 2025. Looking ahead,
we continue to have confidence in our ability to deliver a target return on
equity in the mid-teens across the insurance cycle. The Board's decision to
approve a share buyback programme further demonstrates its confidence in the
value of Conduit's franchise and our commitment to deliver shareholder value."

 

Key highlights:

•   Gross premiums written of $410.2 million, a 15.0% increase over the
first three months of 2024, with growth achieved across all three segments

•   Reinsurance revenue of $213.0 million, a 17.6% increase over the first
three months of 2024

•   Overall portfolio risk-adjusted rate change for the three months ended
31 March 2025 was (4)%, net of claims inflation, but remains at attractive
levels following improvements in pricing, terms and conditions during recent
years

•   No change from previously reported undiscounted ultimate net loss
relating to the California wildfires of between $100.0 million and $140.0
million, net of reinsurance and reinstatement premiums

•   High quality investment portfolio produced a return of 2.1% for the
three months ended 31 March 2025, driven by a higher yielding portfolio and
the reduction in treasury yields

Outlook:

•   Our deal flow remains robust and strong relationships with clients and
brokers support our ability to target desired classes in a more competitive
environment

•   Additional reinsurance has been secured for both US and global
secondary perils, alongside increased aggregate cover, complementing existing
peak peril protection to enhance resilience and reduce potential earnings
volatility

•   The Board of Directors has approved a share buyback programme of up to
$50 million, in line with Conduit's capital management strategy

•   We expect a 2025 RoE between high single and low double digits,
reflecting the California wildfires, as well as the noted additional
reinsurance purchases and portfolio adjustments

•   We remain confident in our ability to achieve our cross-cycle target
of a mid-teens RoE

Underwriting update

 

Premiums

Gross premiums written for the three months ended 31 March 2025:

            2025   2024   Change  Change
 Segment    $m     $m     $m      %
 Property   237.9  217.1  20.8    9.6%
 Casualty   84.1   69.0   15.1    21.9%
 Specialty  88.2   70.7   17.5    24.8%
 Total      410.2  356.8  53.4    15.0%

 

During the first quarter of 2025, all segments delivered growth in gross
premiums written, led by Casualty and Specialty. This performance was
supported by our strong relationships with clients and brokers that have
provided additional opportunities for renewal and new business.

 

Reinsurance revenue

Reinsurance revenue for the three months ended 31 March 2025:

            2025   2024   Change  Change
 Segment    $m     $m     $m      %
 Property   111.7  98.8   12.9    13.1%
 Casualty   53.0   48.3   4.7     9.7%
 Specialty  48.3   34.0   14.3    42.1%
 Total      213.0  181.1  31.9    17.6%

Pricing

Despite some moderation, pricing levels and terms and conditions continued to
be attractive in the three months ended 31 March 2025, benefitting from
multiple years of compounding rate increases.

Certain Casualty lines continue to benefit from market correction driven by
reserve deterioration and loss emergence, primarily from pre-2020 years.
Market conditions across Property and Specialty segments reflect some
increased competition following significant pricing increases over the past
several years.

Conduit Re's overall risk-adjusted rate change for the three months ended 31
March 2025, net of claims inflation, was (4)%, and by segment was:

 Property  Casualty  Specialty
 (6)%      (1)%      (3)%

Net reinsurance losses and loss related amounts

The first quarter of 2025 was a highly active period for insured catastrophe
events for the industry, including the California wildfires, severe convective
storms and other risk events. The California wildfires were the most notable
loss event during the first quarter of 2025, causing widespread damage in the
Los Angeles area. As previously reported, our estimated undiscounted net loss
estimate across all segments remains between $100.0 million and $140.0
million, net of reinsurance and reinstatement premiums.

Our loss and reserve estimates have been derived from a combination of reports
and statements from brokers and cedants, modelled loss projections, pricing
loss ratio expectations and reporting patterns, all supplemented with market
data and assumptions.

We continue to review these estimates as additional information becomes
available and the financial impact will be reported in more detail in the
interim results for the six months ended 30 June 2025. Our undiscounted
ultimate loss estimates, net of ceded reinsurance and reinstatement premiums,
for prior years' reported loss events remain stable.

Investments

In line with our stated strategy, we continue to maintain a conservative
approach to managing our invested assets with a strong emphasis on preserving
capital and liquidity. Our strategy remains maintaining a short duration,
highly-rated portfolio, with due consideration of the duration of our
liabilities. Our investment portfolio does not currently hold any derivatives,
equities or alternatives.

The investment return for the first three months of 2025 was 2.1% driven by a
higher yielding portfolio and the reduction in treasury yields. In the first
three months of 2024 the portfolio returned 0.5% due to a higher yielding
portfolio which offset the increase in treasury yields in the quarter.

The breakdown of the managed investment portfolio is as follows:
                            As at 31 March 2025  As at 31 March 2024
 Fixed maturity securities  87.9%                88.4%
 Cash and cash equivalents  12.1%                11.6%
 Total                      100.0%               100.0%

Key investment portfolio statistics for our fixed maturity securities and
managed cash were:

                 As at 31 March 2025  As at 31 March 2024
 Duration        2.7 years            2.5 years
 Credit quality  AA                   AA
 Book yield      4.1%                 3.9%
 Market yield    4.6%                 5.3%

Capital & dividends

During the first quarter of 2025, CHL's Board of Directors declared a final
dividend of $0.18 (£0.13904) per common share in respect of 2024, which was
paid in pounds sterling on 17 April 2025 to shareholders of record on 21 March
2025, resulting in an aggregate payment of $29.7 million.

During April, shares purchased by CHL's employee benefit trust amounted to
$3.0 million or 693,474 shares, and will be held in trust to meet future
obligations under CHL's variable incentive schemes.

CHL announced today that the Board of Directors has approved a share buyback
programme of up to $50 million (the "Buyback"), in line with Conduit's capital
management strategy. The Buyback will be funded from existing cash resources.
Further details of the Buyback will be available following Conduit's Annual
General Meeting.

 

Presentation for Analysts and Investors at 12:00 noon UK time

Conduit's management will host a virtual meeting for analysts and investors
via a webcast and conference call on Wednesday 14 May 2025 at 12:00 noon UK
time. There will be an opportunity for questions & answers at the end of
the update. To ask a question, please join via the conference call.

To access the webcast, please register in advance here:

https://sparklive.lseg.com/ConduitHoldingsLtd/events/fbd8a020-3b29-4e4d-be70-fed703942a59/conduit-holdings-limited-q1-2025-trading-update
(https://sparklive.lseg.com/ConduitHoldingsLtd/events/fbd8a020-3b29-4e4d-be70-fed703942a59/conduit-holdings-limited-q1-2025-trading-update)

 

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

https://registrations.events/direct/LON2618419132
(https://registrations.events/direct/LON2618419132)

 

A recording of the presentation will be made available later in the day on the
Investors section of Conduit's website at www.conduitreinsurance.com.

Investor Presentation via Investor Meet Company at 4:00 pm UK time

Conduit's management will provide a separate presentation aimed at retail
investors, relating to the Q1 2025 trading update, via the Investor Meet
Company platform, on Wednesday, 14 May 2025 at 4:00 pm UK time.

The presentation is open to all existing and potential shareholders. No new
material, including trading or financial information, will be disclosed during
the presentation.

There will be an opportunity for questions & answers at the end of the
meeting. Questions can be submitted pre-event via the Investor Meet Company
dashboard up until 9:00 am UK time the day before the meeting or at any time
during the live presentation.

Investors can sign up to Investor Meet Company for free, or if signed up, can
add to meet Conduit Holdings Limited via:

https://www.investormeetcompany.com/conduit-holdings-limited/register-investor
(https://www.investormeetcompany.com/conduit-holdings-limited/register-investor)

 

Investors who are already registered on the Investor Meet Company platform and
follow Conduit Holdings Limited will automatically be invited to the call.

 

Media contacts

H/Advisors Maitland - Neil Bennett / Daisy Padovan

+44 (0) 207 379 5151

conduitre@h-advisors.global

Haggie Partners - David Haggie / Peter Rigby

+44 (0) 207 562 4444

Investor relations and other enquiries:

brett.shirreffs@conduitre.bm

Panmure Liberum (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

This announcement contains information, which may be of a price sensitive
nature, that Conduit is making public in a manner consistent with the Market
Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018, as amended, and other
regulatory obligations. The information was submitted for publication, through
the agency of the contact persons set out above, at 7:00 am UK time on 14 May
2025.

About Conduit Re

Conduit Re is a Bermuda-based multi-line 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 positive.

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/

LinkedIn: 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", "preliminary", "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 or loss estimates. Forward-looking statements
include statements relating to the following: (i) future capital requirements,
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
hurricanes, storms, floods and wildfires; the impact of complex causation and
coverage issues associated with attribution of losses to wildfires, wind or
flood damage; the impact of increased costs and inflation to settle claims in
high density areas and emerging information as losses develop; 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
emerging information regarding losses from the California wildfires, the
escalation or expansion of the Ukraine conflict or Middle East conflict, 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.

The Conduit renewal year on year indicative risk-adjusted rate 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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