Conduit Holdings Limited

Good morning everyone. Welcome to the 24 conduit results presentation. The team will present our results, but also an update on the tragic events that have occurred in Los Angeles. And with that I will hand over to Trevor and we will take questions afterwards and the Q&A will be moderated by Brett Shiref, our head of IR.

I'm pleased to be with you today to share our 2024 results as well as provide updates on our January renewal performance. and our exposure to the California wildfires. First, on premiums, during 2024, we continued to grow our portfolio in market conditions supported, with gross premiums written increasing nearly 25% to 1.16 billion. Our approach to building the portfolio has been consistent by selectively deploying capacity to business lines that offer the best risk-adjusted returns, This means that over time, our relative growth by segment will rise or fall based on the various opportunities that we see in the market. During 2024, each of our three segments experienced growth, with the overall picture led by property and specialty, while casualty grew at a lower rate. Our discounted combined ratio was 86%, up from 72.1% in 2023, due primarily to increased catastrophe activity during the year. 2024 was a year with significant natural and man-made catastrophes, and also a number of larger man-made losses occurring in the industry. With over $140 billion of insured loss, it ranks once again as one of the highest on record. The loss pattern during 2024 was somewhat different to what has been experienced in recent years, with a higher frequency of smaller and mid-sized cat events across the globe. Hurricanes Milton and Helene were two of the larger ones occurring, and we recorded an undiscounted net loss after reinsurance and reinstatement premiums of $68 million related to these events, which contributed 9.4% to our undiscounted loss ratio for 2024. This elevated catastrophe activity has continued into 2025 with the California wildfires, which I will comment on further in my report. Balancing this higher loss activity was a solid contribution from our investment portfolio. Net investment return was $66.1 million or 4% for 2024. This was down slightly from the prior year due to lower unrealized gains reflecting changes in interest rates and spreads. Importantly, a larger component of our investment return was from net investment income due to a higher book yield on our growing investment portfolio. In total, we produced $125.6 million of comprehensive income, representing a return on equity of 12.7%. Net tangible assets per share ended the year at $6.7 was 12.9%. A reasonable result in a challenging year with more than $140 billion of insured catastrophe losses and pressure on legacy casualty reserves for the industry. As we have commented previously, our balance sheet remains strong. We have the necessary headroom for further growth in 2025 and expect to focus in those classes where attractive conditions and returns and margins continue to persist. We have achieved meaningful scale, including more than $1.1 billion of gross premiums written in 2024 and more than $3 billion written since inception. This scale creates a growing and diversified portfolio of risk, while we also remain focused on being super selective with the risks that we write. Clients value our capacity and marketing conditions have been very good over the past four years. and this has effectively acted as a tailwind to our growth achievements. Having said that, it is cycle management that remains the key to our strategy. We have always said we will pull back from classes when it's the right thing to do, and indeed, we have adjusted our capacity allocations for certain classes already over the last 12 months or more. Overall, the business is in a very good position currently, and the progress over the last four years has been meaningful. And it is a strong reflection of the team and the quality that we have attracted to the company. Turning to the costs of doing business, this growth in our portfolio has resulted in positive operating leverage on our expense ratio. While we continue to invest in our business, both in terms of people and technology, our premium growth has outpaced our expenses and thereby driving this leverage. We have added to our staff in both senior and supporting roles, ensuring we have the right resources to manage the business growth. And now that we have this scale, we expect to maintain this fundamental expense advantage in our business, supporting our margins and returns, whatever part of the cycle we are experiencing. While profitable underwriting is our primary focus, our investment portfolio has also made significant contributions to our bottom line in the last two years, increasingly facilitating a balanced overall earnings profile. Investments in cash have increased by approximately $400 million from the end of 2023 to year-end 2024, driving the investment leverage in our business. We have maintained a conservative investment strategy to support the underwriting business, but we have benefited from higher book yields and a larger portfolio to drive the increase in investment income. All in, we expect to continue our balanced approach to drive value for shareholders by generating the target returns and managing our capital effectively to grow our tangible net assets per share while returning an attractive dividend. The California wildfires are a major industry loss and have impacted many homeowners in the affected areas. This event is yet another reminder of the critical role that the insurance and reinsurance industry plays in our communities and the support the industry provides as rebuilding occurs. There is still considerable uncertainty around the event and the tail nature of it, with the modeling agencies producing a typically broad range of initial loss estimates. We recognise these, and the $35 billion to $50 billion range is broad, but clients that we are speaking to are very much still in their own loss evaluation process. Until more information comes to the fore, this range is likely to remain as a point of reference for the marketplace. Our approach to assessing conduits exposure has focused around a detailed contract by contract analysis, along with the review of the latest model losses from clients in our portfolio at various return periods. Based on this process, our preliminary undiscounted ultimate loss estimate across all divisions is between $100 million and $140 million net of reinsurance recoveries and reinstatement premiums. As additional information emerges, our ultimate loss estimate may vary from this preliminary estimate, but given the magnitude of the wildfires, we thought it would be helpful to put the loss into context. And our mean expectation for non-peak natural catastrophe model perils such as these is between $40 million and $50 million annually. While it is clearly only February and we have experienced a very significant event early in the year, Our current forecasts lead us to believe we can still deliver an ROE in the low to mid teens for the year. That's clearly dependent on the loss activity with the rest of the year, plus investment markets to a degree. But with reasonable activity for the rest of the year, we believe this is achievable. As regards how the loss impacts the property reinsurance market in general, we would expect to see a firming in the market around the perils of wildfire. and more broadly, a hardening of catastrophe pricing, especially in the USA. The first signs of this will emerge as we enter the coming Q2 property cap renewal season. Further, we would comment that as regards the response in the quota share market, The contracts here will actually begin to capture any market positive response immediately as those in-force treaters are writing business through the year continuously and renewing underlying policies now on a daily basis. Turning back to our performance in 2024, gross premiums written increased by close to 25% or $231 million over the prior year. We achieved growth in each of our segments, led by property and specialty, and risk-adjusted pricing for full year 2024 was up 1% net of inflation. Overall, we maintained appropriate balance within our portfolio while selectively allocating capacity to the risks that we view as best priced on a risk-adjusted basis. For 2024, property represented 52% of gross premiums written compared to 50% in 2023. Casualty was 26% of gross premiums written and specialty increased to 22% of gross premiums written. In total, this results in a similar balance to our premium split in 2024 compared to the prior year, and we continue to optimise the portfolio and the clients that we support. I will now hand it over to Greg to provide some more detail by segment and an update on the January renewals.

Thanks, Trevor. Our property segment gross premiums written has grown 29% from 23 to 2024. This significant growth has been supported by our partnerships our underwriting team have worked very hard to develop, most notably in relation to our treaty reinsurance support of US primary carriers. The sector continues to evaluate the impact of inflation, and more importantly, price for it, with adequate increased premiums to cover the growth in underlying exposure. The non-cap loss ratios remain attractive, and the core of our portfolio being primarily commercial risk. Our natural catastrophe exposure is somewhat more internationally diverse than our primary book, but still remains US-biased. This has been where we have seen the most opportunity to collect premium for the natural catastrophe perils that are covered within our requirement levels, both in terms of pricing and terms. Although the undiscounted combined ratios across all years have been influenced by NatCat losses, the combined ratios for 2021 and 2022 also reflected a lower premium base as we built out our portfolio. After a very favourable year in 2023, The undiscounted loss ratio rose in 2024, driven by the events during both Q3 and Q4. In particular, hurricanes Helene and Milton. The portfolio is broadly where we planned it to be, and its composition reflects the build out of our portfolio with the right partners. Across the portfolio of property, we've benefited from plus 3% risk adjusted rate change over the 2024 fall year. This rate change is our view of net change after inflation, exposure and terms and conditions. So it also is reflective of some of the upwards pressure of increased seeding commissions or overrides on the primary business. When comparing 2024 June and July renewals to those of the 1st of January 2024, we found that higher or more remote XOL contracts were showing some negative rate change. albeit from a historic high in absolute terms, and in our view, remained priced with combined ratios remaining stable. The year was active from a major NatCat perspective, with PCS alone reporting $94 billion of natural catastrophes in the US, which does include last week's industry loss increase to Hurricane Helene. Total industry NatCat losses look to be in excess of $140 billion for 2024, and supports our observations of increasing trend from an absolute dollar perspective. We moderated growth in the casualty portfolio to an increase of 8% in gross premiums written, which is both a function of active portfolio management from Conduit Re and our partners modifying the texture of their primary accounts. For example, we've reduced our participation on classes such as D&O where the rate and terms and conditions have become less favourable. This is positive cycle management from our partners and is what makes a longer-term relationship between primary carrier and reinsurer work very well. Beyond DNO, to which we do talk a lot about, general third-party liability, a much larger market, has numerous areas of interest for us right now, and generally this class continues to reprice risk with increased rates, allowing for the consideration of claims inflation and acknowledgement of prior year deterioration. Now, prior year in this context is meaning years prior to conduit re-being formed. Most importantly, in the general third party liability class, I'm pleased to say that our partners demonstrate strong underwriting discipline with thoughtful and balanced limit deployment, the key to a healthy portfolio construction. The undiscounted combined ratio remains stable year on year. We remain patient. given the longer-tail nature of the portfolio, and focus on building what we believe is the right portfolio and monitoring the underlying trends across both our own portfolio and the wider industry more generally. Risk-adjusted rate change is broadly flat across the portfolio, and based on our analysis of claims inflation, we believe the increases in primary pure rate continue to outpace inflation, and this is reflected in the premium growth in our portfolio. There are observational points shared with us by our partners, indicating that primary conditions could be improving even further as underlying trend is being better understood, which we believe may produce more opportunity. We have grown our gross premiums written in the specialty portfolio by 39% for the fall year of 2024. This is a result of developing some new business with core clients who provide us access to balanced books of multi-class business, bringing both growth and diversification. This has also introduced some additional geographic diversification away from the US, and we expect to build this out further in the future. The combined ratio increased in 2024 compared to 2023. driven by the impact of the Baltimore Bridge collapse and other large risk events in the market. The risk-adjusted rate change is plus 1%, which is generated from a broad range of business and transaction types. Our core marine and energy portfolio has remained very stable, with growth coming from non-correlating exposures, enabling specialty accumulations to remain well within appetite. The Baltimore Bridge collapse provided the specialty market with a large industry loss, with very specific contracts responding to it due to the type of coverage likely to respond to the claims emanating from the event. This will take time to settle, but due to the construction of our portfolio, we remain very comfortable with our ability to identify our potential exposures and indeed evaluate them. We continue to actively identify, investigate and evaluate multi-class opportunities. Our ability to do so is enhanced due to our underwriters all physically situated together at the one desk in Bermuda. The January renewal season was fairly orderly with the market renewing contracts from a near historic high in terms of pricing levels. The significant loss activity from 2024, both Nat Cat and Man Made, such as the Baltimore Bridge collapse, gave sharp focus to pricing and capacity. Loss affected areas of the market across property and specialty responded to exposure increases and performance. the loss-free contracts were more sensitive to supply and demand, and this was best characterised by the variation observed generally in the property CatXOL contracts. The markets we have greatest focus on, though, remain well-priced. While orderly, the market demonstrated some significant reinsurance buying strategy changes, which affected some of the existing panels, and probably caught them by surprise. The knock-on effect of this clearly caused some reactionary shifts in target risk deployments, and pricing probably reflected this. Now taking each segment in turn, we recorded a risk-adjusted rate change of minus 5% from property, which reflects a heavier skew towards primary quota share than the XOL portfolio. Variability in the XOL contracts was more like plus 5% to minus 15%, dependent on the performance and the attachment points. The effects of Hurricane Helene and Milton certainly supported the discipline of primary carriers to present business plans with risk-adjusted flat rates, but there was certainly more interest from the reinsurance market in supporting these types of insurers. It is understandable, given the underlying performance, but as with increased supply, pressure came on seeding commissions and they grew. and hence perhaps reduced our absolute margins in this space. That said, although there were some pressure on terms of conditions, given the ample capacity, the market generally remained disciplined and attachment points tended to remain stable. The casualty market continues to digest loss deterioration and significant nominal claims emergence from the back years, typified here by the period prior to 2020. This is the starting point in any actuarial analysis, and hence this drives much of the evaluation. Generally, insurers are now writing very different books than back then, with smaller limits and more premiums spread across a greater number of towers, creating more balance across these books of business. We had a minus 1% risk-adjusted rate change for casualty. which reflects our view of inflation and trend after pure rate change, as well as any changes in underlying policy coverage. Although the rate change metrics for the specialty portfolio largely mirror those in property and casualty, the diverse nature of this portfolio allows us to remain selective and continue to build an overall portfolio that remains attractive to us. We successfully placed our core Outwards programme at 1.1 and included some further expansion of the panel, We are able to secure the core placement at more favourable terms and, as in past years, will consider other purchases throughout the year. Since launch, our planned PMLs have grown both in absolute terms and as a percentage of our balance sheet, as we have grown and scaled the business, as would be expected. We have published our planned position each year, calibrated to a July 1st viewpoint, and this chart summarises our progress over the period. To date, our most significant modelled net PML has been either Florida wind or California earthquake, depending on year and return period. This is based on our gross modelled position for a first occurrence, and then netting down based on how our reinsurance would apply to these modelled events. Market conditions are also a factor, and in 2024 our plan showed lower PMLs than prior years. For 2025, we had anticipated the potential for improving market conditions and increased PMLs in our plan, most notably at the 1 in 250 return period. Though, at 1.1, we saw an oversupply of capacity for excess of loss business, so our current PMLs are notably below our plan for the year. Our current position provides opportunity to deploy further through the year if the market conditions support it. Going forward, We don't expect our planned PMLs will grow from these levels without a corresponding growth in our balance sheet. Again, our views may change based on market conditions. I will now hand over to Elaine to provide some more detail on the financials.