Conduit Holdings Limited

Good day, everyone. Welcome to Conduit's 2025 Interim Results presentation. We appreciate your time today as we discuss our performance for the first half of the year. Joining me on the call are Neil Eckert, Chief Executive Officer, Elaine Whalen, Chief Financial Officer, and Nick Prichard, Interim Chief Underwriting Officer. Please note our disclaimer language on slide two. I will now turn the call over to our CEO, Neil Eckert.

Thanks, Brett. Welcome to our presentation. I'm today joined by Elaine Whelan, our CFO, and Nick Pritchard, our interim CEO. Today's presentation will cover our results for the first half of 2025, our view of the market, and our updated outlook for this year and beyond. I will begin with a summary of our interim results. Nick will then provide a more detailed segment level performance review. Elaine will cover our financial and investment highlights, and I will close with some key takeaways and thoughts on the future of Conduit. For the first six months of 2025, we delivered growth in gross premiums written across all three of our segments. Property and casualty experience, strong increase in premium, while the growth in specialty was more modest relative to recent periods. We have seen increased competition during Q2, causing us to reduce certain parts of the portfolio. In line with our plans, we have started to add more excessive loss business to our portfolio of mid-year renewals. As most of the business has been written for 2025, we will continue on these initiatives throughout next year. Moving to performance, The first half was marked by elevated loss activity, including wildfires, severe convective storms, aviation events, and the recent High Court judgment regarding Ukraine war loss. These events contributed significantly to our undiscounted combined ratio of 122.1%. The California wildfires alone added 31.6% to our combined ratio for the half year. Our investment portfolio continued to deliver with a 3.9% return during the first six months, producing a net investment result of 63.8 million. Importantly, a large component of our investment return was from the income generated by our growing investment portfolio, which now totals 1.9 billion. Ultimately, we reported a disappointing comprehensive loss of 13.5 million for the first half. largely a result of elevated loss activity. 2025 is a transitional period across multiple dimensions for Conduit, including portfolio composition, both inwards and outwards, and personnel. During the second quarter, we undertook a number of strategic actions in response to evolving market conditions and elevated loss activity. These developments have unfortunately led us to revise our expectations for the return on equity for this year. We now anticipate our ROE to be in the mid single digits for 2025. This updated guidance reflects both the actions taken and the loss experienced during the second quarter of 2025, which includes the following. We have increased our reserves related to Ukraine following the UK High Court judgment. which has significantly increased the industry's insured loss from the event. We have also taken a more conservative stance on several aggregate excessive loss contracts, given the heightened loss activity in the first half of the year. Our guidance incorporates losses from other aviation-related losses that occurred during the first half of 2025. Further, as previously disclosed, we have made targeted portfolio adjustments including purchasing additional reinsurance and reducing certain quota share business. Whilst these actions are part of our long-term strategy, they are expected to result in lower premium growth and net revenue in 2025. The most significant driver of our result for the second half of the year will be the Atlantic wind season. We plan on a mean basis and our guidance assumes an average hurricane season. Moving forward, we remain focused on our long-term strategy and are committed to improving the company's performance. We continue to invest in our business, both in terms of people and technology, and Condrit is guided by a highly experienced leadership team with decades of proven success in building and managing reinsurance and insurance companies. You would have seen that our most recent hire was William Randolph, who recently joined as our Chief Risk Officer. We are very pleased to have William on board and look forward to the contributions he will make at our risk function. We have also hired a new head of exposure management, and later this year we will welcome a new head of claims and a highly experienced specialty underwriter to partner with Mark Bierman. These are experienced and well-regarded professionals, and we are pleased with the positive reception from the market. Collectively, the leadership team is committed to delivering Conduit's long-term vision and strategy. We will exercise discipline, managing risks thoughtfully, and ensure that we are allocating capital where it can generate the best outcomes. With this approach, we believe our cross-cycle mid-teens ROE objective remains achievable, whilst recognising the near-term challenge of the 2025 results. Now, turning to our underwriting performance for the first half of the year, we achieved 8.9% growth in gross premiums written, reaching $803.3 million. This growth reflects both targeted new business and increased participations on accounts where we saw strong alignment with our underwriting approach. Our balance between property, casualty, and specialty remains similar to the prior year, and each of our segments have gained scale. We are taking steps to refine our book, reducing exposure to business that no longer meets our return thresholds. This was most apparent in specialty during the second quarter. Our underwriting decisions will be margin led and we are willing to walk away from underpriced business. Overall, across the portfolio, risk adjusted rates have reduced by 3% net of inflation through the first half. In our view, rates remain relatively strong in our target classes. Pricing has come off historical highs, but remains near 2023 levels. Despite the elevated loss activity during the last two years, industry capacity remains near peak levels, and this excess capital is driving more competition. Regarding losses, this has been an historic year for catastrophes. The first half of 2025 was one of the most loss-intense periods on record for the industry. Ensured catastrophe losses are expected to reach at least $100 billion for the first six months, which is more than double the long-term average and the second highest first half total ever recorded. Over 90% of these losses occurred in the US, which is where the majority of our property exposure lies. Catastrophe activity was driven by a combination of severe convective storms and the devastating Palisades and Eton wildfires, which together accounted for over $40 billion of the total. Our undiscounted net loss, net of reinsurance and reinstatement premiums for the January California wildfires is $118.3 million, which is within our previously disclosed range of between $101.4 million. The majority of this impact was concentrated in our property segment with some exposure and specialty as well. On top of this, we have experienced development on losses relating to the conflict in Ukraine, as well as several large risk losses, such as the Air India aviation crash. As discussed last quarter, we have made meaningful changes to our insurance program since the wildfires and have purchased considerable protection against large secondary perils. Our aim is to reduce volatility going forward from these types of events. Looking ahead to 2026, our intention is to embed secondary peril protection more structurally into our core program, reducing our net exposure to large secondary perils. These changes reflect our intent to reduce volatility and manage gross to net more effectively as a core part of our underwriting strategy. With that, I will hand over to Nick for a deeper dive into our market experience across divisions.

I'll now turn to our performance at each of our business segments, along with respective market conditions and outlook. With a $65.5 million of year-to-date growth, $41.8 million was driven by our property segment, which grew 9.5% to $483.6 million. This was supported by a continuation of increased demand from U.S. carriers in addition to inflation-linked exposure growth. In line with our Q1 commentary, we observed more limit purchase through mid-year in the US. As we anticipated, renewal negotiations were more challenging than in 2024. Risk-adjusted rates, net of inflation declined by approximately 5% through June 30th. Outcomes varied significantly by region, peril, and layer. This reflects broader market dynamics, including increased capacity and higher ILS participation. the ILS market continues to show strong appetite, contributing to increased capacity and competitive pricing on certain layers. Our growth rate has moderated, and depending on market conditions, this trend could continue as we prioritize risk that satisfies our return hurdles. During the year, we continue to increase our line size on high-performing treaters, and we actively reduced exposure to accounts where pricing or structure no longer fits with our risk appetite. We made progress on several new placements in Q2, notably on excess of lost business, but also in select quota share deals. These steps support our strategic goal to increase excess of lost business over time. We're actively managing our portfolio to achieve this shift, including adjusting line sizes, targeting new excess of lost opportunities, along with refining and marketing our underwriting strategy to support this evolution. As Neil mentioned, the first half of 2025 was one of the most active catastrophe periods on record, particularly in North America, where most of our exposure lies. The largest event was the California wildfires in January, but there was also several large severe convective storms and other smaller events that contributed to results. Our undiscounted combined ratio for the property segment reflects this loss activity and increased to 132.5% for the first half of 2025. Looking ahead, we remain selective in deploying capital as we make careful adjustments to the portfolio. This also includes a revised Outwards Reinsurance Programme the remainder of 2025, which will better protect against large sector perils going forward. I'll now turn to our performance in the casualty segment. Casualty experienced the strongest growth rate among our underwriting segments during the first half of the year, with gross written premiums of 14% to $169 million. Growth was concentrated in US general liability classes, where we have deepened our partnerships with several key participants in the excess and surface lines market. These are mostly existing clients where we have observed strong underwriting behaviours and we therefore sought to increase our line size on their programmes. Equally, as we manage our casualty portfolio for changing conditions, we have reduced exposure to segments where pricing has been more competitive or rate adequacy is deteriorating, such as D&O and financial institutions. For the period to the 30th of June, the risk-adjusted rate change for casualty was plus 1%, with positive momentum in US general liability offsetting softer trends elsewhere. Seating commissions have moderated slightly, improving net economics as we look forward. Overall, the reinsurance market is showing strong demand to deploy capacity in casualty classes. However, we would characterize the market as genuinely remaining disciplined, given some of the recent experience in the industry from back-year deterioration. For the first half of the year, our casualty segment undiscounted combined ratio was 103.8%. Historically, our four-year ratio tends to improve relative to the half-year result, reflecting the timing of earnings and loss emergence. The 2025 ratio also reflects an increase to our unallocated loss adjustment expense estimate, given the overall casualty claims environment. Prior year reserves remain stable, and in our opinion, our booked ratios include prudent allowances for inflation and uncertainty through our risk adjustment margin, which we expect to unwind over time as claims are paid. Due to the long-term nature of the business, we will continue to be selective in casualty classes and prudent with our reserving. Overall, we believe our portfolio is well-positioned and resilient. Our focus remains on long-term partnerships, disciplined underwriting, and selective diversification beyond the U.S. market. Finally, moving on to our specialty segment. We have built an attractive, diversified portfolio of specialty risks. We will look to expand this over time with the addition of underwriting resources and as market conditions warrant. Gross premiums written in specialty rose 2% to $150.7 million during the first half of 2025, with growth constrained by softening rates and our selective underwriting approach. The moderation in year-to-date premium growth to 2% for the half-year from 25% in Q1 is largely attributable to a combination of timing-related effects and more market competition in the second quarter. While Q1 benefited from strong new business momentum and favourable prior-year comparisons, During Q2, we came off a few treaters where pricing or terms and conditions did not meet our standards. We also reduced our offered line on certain programmes, while some accounts experienced slower-than-expected exposure growth or structural changes that reduced our premium capture. Risk-adjusted rates, net of inflation, declined by approximately 4% through June 30th, with pressure across most classes, including marine and energy. However, earnings and terms and conditions have largely held. Specialty classes have been exposed to some significant risk losses, including the Baltimore Bridge and several aviation events. We have been disappointed that pricing in these classes has not responded to some significant claims for the industry. The undiscounted combine ratio for the first half of the year was 105%. This result considers impacts of our aviation and war-related exposures, including developments linked to Ukraine. A small portion of our California wildfire exposure also sits within the specialty book. Regarding Ukraine, the situation remains complex and we are monitoring legal developments and working closely with partners to assess outcomes. Looking ahead, we have reinforced relationships with proven partners and are seeing increased traction in multi-line and excess of loss opportunities. Submission flow has increased and we are maintaining discipline on event limits and loss ratio caps. While top-line growth is modest, we are prioritising quality of underwriting. I'll now hand over to Elaine for the interim financial results.