Conduit Re reports solid first-half growth

The Bermuda-domiciled, London-listed firm said it experienced strong growth in gross premiums written in the six months ended 30 June, as they rose 52.9% to $542.2m.

It put the growth down to a strong renewal book and high-quality partnerships in its third year of trading.

The company said it demonstrated resilience during an active natural catastrophe period for the industry, avoiding major event losses that could have impacted its results.

Its combined ratio, which measures the profitability of underwriting operations, improved significantly to 72.5% for the period, compared to 99.9% for the same part of 2022.

Conduit said it further diversified its risk management approach by sponsoring the issue of its first $100m three-year catastrophe bond.

The move would enable it to secure additional collateralised reinsurance cover, the board said, complementing its traditional retrocession program.

Conduit’s expense ratios remained stable, with a total reinsurance and other operating expense ratio of 15.0% for the period - only slightly higher than the 14.9% it recorded for the first six months of 2022.

The company said its investment portfolio proved to be of high quality, with an average credit rating of AA.

Its book yield for the first half was 3.2%, while the market yield stood at 5.5%; comparatively, those figures were 1.4% and 3.5% respectively for the same period in 2022.

The net investment return for the first half was $22.6m, which included a net unrealised gain of $5.7m.

That made for a significant improvement from the same period in 2022, when it reported a net investment loss of $50m, including $54.3m of net unrealised losses.

Conduit’s comprehensive income for the first half totalled $78.6m, representing a return on equity of 9.1%.

The company declared an interim dividend of 18 US cents, or 14p, per common share.

Looking ahead, Conduit said it was positioned for continued growth as it estimated $1.9bn of ultimate premiums written from its launch in December 2020 up to 30 June.

Additionally, the firm said it anticipated a significant pipeline of unearned premiums of about $755m, which would be realised in subsequent years.

Market conditions remained highly favourable, the board explained, particularly in the property and specialty segments.

Conduit said its team, reputation and underwriting business model positioned it well to take advantage of current, hard market conditions.

“This has been a very successful half-year for Conduit, and we are delivering on the goals we set out when we founded the business in 2020,” said chief executive officer Trevor Carvey.

“In a half-year which has seen high industry losses, our focussed underwriting strategy has delivered strong underwriting results which, coupled with our low expense base, have delivered a very attractive combined ratio of 72.5%, or 83.1% on undiscounted basis.

“With no back years prior to 2021, we continue to look forward to deploying capital effectively, taking maximum advantage of current market conditions, which we see continuing for some time.”

At 0807 BST, shares in Conduit Holdings were up 3.04% at 492p.

Reporting by Josh White for Sharecast.com.