Conduit Holdings Limited

Good morning and good afternoon, everyone. Welcome to Conduitory's full-year 2022 results call. Today's call will be covered by Neil Eckert, our Executive Chairman, Trevor Carvey, our CEO, Helen Whelan, our CFO, and Greg Roberts, Chief Underwriting Officer. The forward-looking disclaimer is now on the penultimate page of the deck, so I'm now pleased to give the floor to Neil Eckert.

Thanks, Antonia. You may remember that at Q3 we spoke of the perfect storm for reinsurance going into year end. I do not intend to go through all of these items, but I do believe there's now widespread agreement that we are seeing one of the best market environments of the last decade, largely driven by this equilibrium between supply and demand. Inflation has been a key driver of this. Everyone was talking about it before Monte Carlo and before Hurricane Ian. but inflation is still one of the biggest drivers. We're seeing significant reserve strengthening across the industry, and I don't think that this reserve strengthening is done yet. Clearly, conditions are better today than we envisaged at the IPO, and Conduit Re is in a perfect place to take advantage. So we're well positioned to scale our model. And this slide shows the three facets that gives us that fundamental belief. Our underwriting is a simple portfolio. It's pure reinsurance. Our balance sheet strength gives us ample capital to lean into this market. It's legacy-free, and we've seen the impact of inflation across the sector. Finally, operational excellence. We underwrite out of one location. The command chain is short, and we can respond to our customers' needs. With that, I'll leave it to Trevor to comment on the 2022 results.

Thanks, Neil. The growth in gross premium returns. a tremendous reflection of the continued development and broadening of the premium base in the business. We will talk later around the more specific details of the class by class evolution but showing a 68% to 637 million dollars over 2021 is a solid progression and actually it's also broadly in line with the rate of growth that we gave in our inaugural five-year plan In that regard, if we look at the ultimate estimated premiums for 2022, these are 659.9 million, and that's versus the original year two plan figure that we gave of 626 million. Looking at underwriting performance in 2022, as we all know, it was an incredibly large event losses with reportedly in excess of $120 billion in natural catastrophe losses, significant and ongoing Russia-Ukraine situation. As regards our underwriting performance, we've produced a small underwriting profit, effectively a break-even number. And given that the company's first underwriting year was in 2021, and we have no material prior impact in our numbers, it is in many sense a purer look through into the company's performance in this extreme industry loss year. Turning to the combined ratio of 107%, That includes a 7.1% operating expense component, which is a reduction from the 15.8% in the prior year and continues the downward trend in line with our expectations. Net investment loss was 52.8 million in the year, largely driven by the movement in yields. And Elaine will expand more on this later in the presentation. But suffice to say for now that on investment strategy, we maintain our approach of maintaining a high quality portfolio with the risk very much being taken on the underwriting account when we seek to minimise the risk on the asset side. On dividend, we have declared our standard dividend of 18 cents being the same as last year. Moving finally to the 2023 underwriting year and the activity seen through the January renewal season, we did provide a market trading update earlier in January where we reported a healthy 60% premium growth across our three combined divisions of property, casualty, and specialty. Coming out of the 22 year, we had around $260 million of business due to renew at January 1. With the consideration of increasing rates, increasing deal flow, and our ability to lean immediately into this market, the team grew the January attachments to $421 million on estimated ultimate basis. We think that's a great result to start in these slides later. A slide here on the makeup of the 2022 business and a reference to the original plan that we articulated. First point to note is the high level split and the property class being pretty much on the plan percentage with specialty being lower than the original plan. And that's a reference to our continued view that we had much of what we saw on specialty through 21-22. we're still pricing at less than what we refer to as the hurdle rate. We've spoken before of an often lack of transparency in the specialty deals being structured and presented in the market over the last few years. And this is a major explanation as to why we resisted deploying more into the space. As we've said, we plainly had no crystal ball around events and losses emerging from situations such as Ukraine-Russia. But it does underline the premise that unless you are getting paid adequately for the risks that you know you're taking on, it makes no sense to offer a blanket style cover for risks that you don't know are being covered also. Thankfully, the market has corrected significantly in this space now. And 2023 certainly presents a better or perhaps fairer playing field for reinsurers. On casualty. we gave that a larger allocation through 22 than the original plan as we were able to see an enormous volume of business from our brokers and clients and many thanks to them for their continued support we talk often of our risk triage or risk selection process in this class and our hit rate on casualty is between 10 and 15 percent of risk being presented through 2022 and being able to assimilate the data set and finally narrow down to select the contracts that sit us alongside really solid core casualty underwriters in the insurance space, seem to us the logical place to go. We really like the casualty book we have in place, and as a core base, it's what we are building off of for 2023. On the overall makeup of our underlying premium base, it's worth noting here that our book continued in 2022 to skew heavily towards the commercial sector rather than the personal lines. For instance, we are not a motor writer, and yes, whilst that class is now showing signs of correction, we think that the commercial pricing is a better place to be skewed towards. Finally, a word on cat versus non-cat. Across the total premium base that we write, we are broadly two-thirds non-cat versus one-third cat, and that is deliberate. In looking to build a balanced book that can withstand shocks, have shock absorbers actually built in, if you like, It's obvious that an over-reliance on CAT works against that goal with the increased volatility inherent. We like the way CAT pricing is moving, of course, and expect to see more of that class come into our pricing window, but also we are seeing extremely healthy margins still on the non-CAT or risk side of the account. We deployed my Heverly into the non-CAT space in 22 and really like the margins in place here as we go into 23. And with rates moving and conditions improving, it creates an engine that can earn through over time. And being non-cash in nature, actually there is much less requirement and dependency on retro-protection, which again puts us in a good position in the market in our view. In growing the book in 2022, it is useful to reference that in the context of the 21 year and the cumulative gross premiums written since inception. A powerful aspect of the region's treaty arena is always the renewing book for the previous year, especially in an environment of improving prospects and hardening terms. And this slide shows that with the impact of the prior year renewals acting as the base from which the prior year premium is incrementally added to, it puts us in a very strong position. Our growth has been measured, though, and whilst showing the billion dollar number here by Q4 2022 is in itself a testament to the team and the platform built, More importantly for me, it's the discipline followed in getting there. The book has been built in an environment through 21 and 22 where aspects of the market were in flux and also some classes just needed to be avoided, to be frank. But the book in place now, and that is renewing through to my mind, puts us in a great position to build on and add to for the coming year. And on that, I'll hand over to Elaine for the 2022 financial highlights.