27th July 2022

Conduit Holdings(CHL) interim results
Trend

CHL is today announcing its interim results for the six months ended 30th June 2022.
Trevor Carvey, Group ceo, comments “We are seeing strong demand for our offering and we continue to take a highly selective approach to our underwriting in a market which is exhibiting increasingly strong fundamentals. The business is normalising, our combined ratio will be trending towards our target of mid-80s steady state and the business is in an excellent position to continue to capitalise in our chosen markets.”
Underwriting-Strategically Well Balanced Portfolio
-Approximately 70% of the portfolio is non cat business – a key benefit of Conduit’s focused and highly diversified approach
-Conduit’s risk selection and contract structuring process means it has experienced relatively low levels of catastrophe losses in H1 despite higher than average levels of insured catastrophe losses in the market
-Weighting towards quota share business allows Conduit to participate in the significant price rises and improved terms and conditions experienced in the primary markets at this point in the cycle, whilst reducing volatility.
Financials
-Estimated ultimate premiums written increased by 49% on H1 2021 to $496.7m
-H1 comprehensive loss of $61.4m after the impact of:
$24.6m estimated loss in relation to Ukraine(net of reinsurance and reinstatement premiums) including an estimate of the impact of potential aviation claims
Net unrealised loss on investments of $54.3m reflecting the mark to market adjustment driven by expectations of rising interest rates
Potential to unwind over time: portfolio c. 92% fixed maturity with an average duration of 2.4 years and average credit quality of AA
-Opportunity for enhanced investment income going forward in a higher interest rate environment
Interim dividend of $0.18 (approximately 15 pence) per common share declared
-Momentum
Strong, legacy free, unencumbered balance sheet with limited exposure to issues such as claims inflation on reserves
Market conditions remain strong with continuing rate increases and improvements in terms and conditions; 2022 year-to-date indicative renewal rate increase of 4% net of inflation
Reinsurance market is significantly capacity constrained which is driving strong demand for Conduit’s unencumbered capacity and strong balance sheet
The business is still in a significant growth phase. As premiums continue to earn through to the income statement the impact of premiums ceded to reinsurers and other operating expenses will form a smaller component of the combined ratio
51 employees, one operating location benefiting from an open culture and a modern and efficient infrastructure
Engaged with all major reinsurance broking houses, using management’s long-term relationships to access high quality business
Neil Eckert, executive chairman today added "We have built a quality underwriting operation which is perfectly positioned at a time where there is a shortage of reinsurance capacity in the market–Conduit’s business model was constructed for precisely these circumstances. The continued hardening of the market provides Conduit with a substantial opportunity for profitable growth to build out the business.”
Carvey said "Conduit has quickly built a reputation for underwriting discipline and focus, as well as great service. We have now passed $1bn of ultimate premiums written since IPO and it is great to see the validation of our underwriting and approach."

Conduit Trends(10 articles)

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