Conduit Holdings Limited

Good morning and good afternoon, everyone. Welcome to CONVEY 3 interim results for the first six months of 2024. The presentation will be covered by our CEO, Trevor Carvey, our CFO, Elaine Whelan, and our CEO, Greg Roberts. Noting the disclaimer on page two, I give the floor to our CEO, Trevor Carvey, starting on page three. Thanks, Antonio.

I'm pleased to report that we have delivered a comprehensive income of $98.1 million for the half year, representing a return on equity of 9.9%. This compares with $78.6 million and 9.1% for the same period in 2023. This means our book value increased to $6.69 per share. So a good year-on-year performance in what has been acknowledged as a relatively active loss period for the industry. We've grown strongly with gross premiums written of 737.8 million, a 36.1% increase in comparison to the same period last year. A good progression year on year, but with perhaps slightly more front loading than we've seen before. Our robust capital base and retained earnings both support continued growth. as does our careful approach to deploying our defined appetite for natural catastrophe exposure, which I can confirm remains within our stated tolerance level. The severity and frequency of natural catastrophe events was again seen to trend higher in the half year and make it one of the costliest for the industry. While convective storms, floods and the Baltimore Bridge event made headlines, that our own experience is within our normal pricing expectations. Our discounted combined ratio was 75.1%, which compares to 72.5% for the first half of 2023. As would be expected, this includes a provision for the Baltimore Bridge. Our undiscounted estimated loss for this event net of reinsurance and reinstatement premiums is $19.8 million. And while not individually significant in the context of our overall portfolio, nor outside of planning assumptions, there was no similar event in the same period last year. Events like Baltimore can certainly have an impact on market conditions, just as the recognition of COVID losses or wider strengthening of pre-2021 casualty reserves can. I'll make some broader comments here on general market conditions and the trading environment ahead and then Greg will provide more colour and detail shortly on a class-by-class basis. Overall, the market environment remains a great place to be operating and deploying into, and while there is general market commentary around a deceleration in the strengthening of rate, which we certainly observed too, we remain in an environment which benefits from the compounding impact of some significant changes in recent years. Remember, importantly, policy terms. As regards market capacity, we have unsurprisingly seen some new appetite enter the market, notably in the property cap space. But we see this new supply being offset to some extent by inflation-led increases in demand. And this situation was indeed the case in the US mid-year cap annuals. In the non-cap space, we very much like the dynamics here still and the way we can bring on business through the entire quota share aspect of our portfolio. This has been an opportunity we have focused on for the past few years. It has performed well for us and is underpinned by the principles of how we seek to build a well-rated portfolio that keeps volatility in check. Finally, in regards to commentary around our growth path on from here, it is important to note that while we currently are seeing enhanced new opportunities in property and specialty, all three divisions grew during the six months. More on this on the next slide. As I said, Property and specialty stand out right now. Year on year, gross premiums written increased by $195.6 million, with property driving around two thirds of that growth and specialty a letter under a third, with casualty making up the balance. That is a broad split and skew that we are very happy with and have spoken about previously on these calls. Working with our partners to best match their needs and our appetite remains what the team works hard on every day. We do this on individual contracts and on a cross class basis. A real benefit of our operating model and on our ability to consume and analyze data. We remain focused on growing a balanced portfolio, not just between our divisions, but between subclasses and indeed for property between the cat exposed and non cat exposed lines. Overall, across the entire company, we maintain the approximate 70-30 balance between non-CAT exposed and CAT exposed contracts. We like the fit of the non-natural perils component that our chosen partners manage and deliver, and it continues to price up well in the context of the overall balance and diversity of the portfolio. In casualty, good partners are also a focus. While we have grown modestly by $7.6 million versus the comparative period last year, we have developed our relationships where our key partners and insurance carriers have been shown to deliver on their own pricing and cycle management disciplines. This is not only about short term results, but about how our data analysis confirms that actions planned become actions taken. Before handing over to Greg, a word on the expense ratio and the trends we see over time for the company. The other operating expense numbers that we are seeing now in 2024 and the trend down over time is very much in line with the plan we articulated when establishing the business. As was expected, early initial build cost acts as a drag on performance, but by half year 2022 through to the current half year 24, we see the scaling impact that is present in the organisational make-up and from half year 23 to half year 24, The other operating expense ratio reduced from 5.7% to 4.6%, which is a healthy position to be in the industry. That said, we continue to invest in infrastructure systems and people, and we benefit from building and driving the business strategically from one location. And we see that immediacy of working is a real differentiator, and that should not be underestimated in terms of tangible value. So thanks, and I'll hand over to Greg.

Thanks, Trevor. The property market remains strong, continues to be an attractive market to conduit REIT as we continue to build and grow our treaty portfolio. We have increased our gross property premiums written by $133.4 million from H1 2023 to H1 2024, which is as a result of new and renewal contracts from H1 2024, but also from premium writing through from prior years. Inflation has not gone away and we're continuing to grow our premium base ahead of exposure with our established quote share partners and their reinsurance treaties. Overall, our footprint remains where we believe the best trading environments lie and so still have a weighting towards the US and are focused on the primary market. As I've mentioned in the past, territories such as Florida remain a part of our portfolio. but this has not been an area where we have sought to expand through the mid-year renewals and have therefore maintained a geographic distribution within the US on a broadly similar shape to that of 2023. This consistent approach to the management of accumulations allows us to continue to grow our property exposure whilst remaining within our preset PMLs. Our primary footprint, typified by ENS and middle market quota share treaties, continues to deliver growing subject premium base generally driven by rate our partners continue to exhibit discipline across the terms and conditions and are ensuring that original deductibles remain appropriate for the growing risk exposures this is so very important as much has been achieved in setting a manageable risk transfer level from the original policy holders and when deductibles do not keep up with inflation that's when the problems occur The ENS market remains strong, with limit deployment remaining sensible. That said, increased competition is visible. It's also worth noting that a delta between CAT and non-CAT pricing is becoming more visible for property policies placed in the ENS market, and the CAT-related component of the risk is starting to show signs of some rate softening. The broader CAT excessive loss market is always more sensitive to the supply and demand of capacity And our view here is that margin has started to reduce, resulting in broadly flat risk-adjusted pricing. Within the context of our overall property growth, our XOL premium has increased, but generally in areas where it complements the broader natural catastrophe exposure footprint. The texture of our portfolio remains stable, which, as Trevor mentions, can be exampled by approximately 30% of our total property, specialty and casualty portfolio premium, being associated with natural catastrophe risk. Finally, a comment of the undiscounted combined ratio, where it shows a small uptick half year 2023. This is driven mainly by an increased acquisition ratio with loss ratios largely flat and loss activity broadly within expectations for H1. H1 2024 shows our casualty gross premiums written at 148.2 million US dollars, being a 5% increase from H1 2023. Though this is not a significant movement in percentage terms, the continued dynamic underwriting activity of the team means that we have a mixture of growth from key partners, as well as actually reducing shares of other business, as we work with our partners to continue a balanced and disciplined portfolio construction. The management and pricing of risk accumulations continues to be assisted in our weighting to quota share over XOL, delivering balanced blocks of adequately priced premium for smaller risk limits when compared to a pure XOL portfolio. It is evident that more claims from 2019 and prior underwriting years are making their way through the courts and into the data sets and back year track records of current treaties in the market. This is clearly causing actual claim experience to deteriorate for these pre-conduit treaty years and put pressure on the treaty economics. This has been manifesting itself through some Seeding Commission reductions being passed back to reinsurers in the current year. And indeed, we're seeing this in our portfolio with renewals through H1 2024. Again, areas such as public DNO continue to show significant variance in the insurance risk pricing. we remain very cautious here. The headline rate changes are significant, but sometimes do not tell the whole story. Our experience here is that the market is dealing with this in very different ways in managing their deployment and options available, such as either increasing attachment points or de-risking their dollar limit positions as not always being applied. As ever, the primary market is very broad in its underwriting approach, and the skill here is understanding who is doing what and when. We continue to monitor the pricing adequacy of the underlying insurance policies through the sharing of incredibly granular risk-based information from our specialist insurance partners. The underlying rate generally continues to flow through in absolute terms, which is good news, but of course then when considering the impact of claims inflation, the net effect is dampened. Overall, though, we see our partners behaving in a disciplined manner, providing further rates maintained ahead of inflation, and we remain very comfortable with our overall casualty positioning in the market. We've had a strong H1 in the specialty division, with gross premiums risk and growth of 59%, as we continue to add balance blocks of various classes to our portfolio. We delivered on some good opportunities in the half year, including a number of multi-class transactions with key partners. These deals can take sometimes significant time to execute, but deliver very balanced risk profiles and solid long-term fundamentals. Our specialty business remains a broadly low contributor to our overall natural catastrophe exposures, and managing the risk accumulations has always been a key focus of what we do here in this class. One benefit being the reduced requirement or need to hedge large peak positions as we continue to build the portfolio over time. Over the half year, the higher combined ratio moved up from 80.7% in H1 2023 to 95.7% and is largely driven by the Baltimore bridge loss which occurred in Q1. As we have mentioned earlier in the presentation, We believe that the Baltimore Bridge industry loss will likely provide an important data point as the key year end renewals come to the market. On specific classes, we've noted through H1 that increased demand by more reinsurance limit from the marine and energy insurance sector is putting more capacity into classes such as offshore and also the renewable sector. This has created some increased demand in reinsurance limit, which on the one hand is good, But we've often not seen what we would view as the appropriate premium being passed over to the reinsurers here. It is definitely a growing sector, and we watch it with interest, providing, of course, we're able to achieve a balance between risk and premium going forward. On cyber, this remains very much an incidental class for Conduit, and we continue to largely pick up exposures via broader contractual relationships, where cyber is a small part of a client's insurance footprint. The recent CrowdStrike event provides an important data point for the industry and goes to the point we have made before, that being able to fully understand, control and price for risk accumulations is fundamental to our business. In closing, our specialty book continues to add to the overall portfolio mix and complement what we do in property and casualty. We remain focused on the classes we know, understand and like, enabling us to price and structure the reinsurance transactions appropriately. We continue to see opportunities for growth in the larger key partner transactions. And looking forward, year-end renewals could see some re-rating in the recently loss-impacted classes. So looking across all three portfolios, I continue to see opportunities to focus our efforts on through the remainder of the year. And with this, I hand over to Elaine.