Conduit Holdings Limited

Good day, everyone. Welcome to Conduit's full year 2025 results presentation. We appreciate your time today as we discuss our performance for the year. Joining me on the call are Neil Eckert, Chief Executive Officer, Elaine Whelan, Chief Financial 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. As Brett mentioned, I'm joined by Elaine Whelan, our CFO. Today's presentation will cover our business performance for 2025 and our view of the market and January renewals. I will also provide an update on some key actions we have taken during the year. Elaine will provide some additional detail on our financial investment highlights for the year before closing remarks and time for questions. We have had some significant changes within the executive team over the last 12 months that have brought additional depth and expertise to the organisation. Although he is not with us on the call, I'm excited that Stephen Postlewhite officially joined Conduit as Chief Underwriting Officer in late January. Stephen brings a strong CUO background to Conduit and is quickly getting immersed into the business. I have no doubt that he will make an ongoing impact. William Randolph joined as the Chief Risk Officer last July. William has settled in well and has made some noticeable improvements to our risk functions already. We also welcome new talent in other key functions such as underwriting, modelling, actuarial and claims. We are now up to 68 employees here in Bermuda and we will continue to hire and invest in the business as we see fit. I would also like to mention some recent changes at board level. The board recently concluded its recruitment process to identify a new chair and I'm delighted that Nicholas Schott has agreed to take on the role. Nicholas joined the board in November with a strong background in financial services and advisory roles and is well suited for the role of chair. I look forward to partnering with him as we continue to move Conduit forward in the execution of our strategy. I would also like to thank Elizabeth Murphy, who will retire from the board ahead of the 2026 AGM as part of our normal board succession planning. Elizabeth was a founding director and has provided valuable guidance and insight as audit committee chair during her tenure. 2025 was a difficult and transitional year for Conduit that ended with a double-digit ROE after a challenging start to the year. Our portfolio continued to grow with gross premiums written increasing nearly 7% year-on-year to $1.24 billion. We found select opportunities to grow our business as markets softened over the course of the year. Catastrophe activity and risk reduction loss frequency remained elevated in 2025, with approximately $127 billion of insured catastrophe losses, according to AM. Our undiscounted combined ratio in 2025 was 101.5, reflecting our larger exposure to the California wildfires during the first half of the year and a benign second half with no U.S. landfalling hurricanes. We enjoyed excellent investment performance, which delivered a 6.7% return for the year, contributing $119.5 million of income. Our managed investments continued to grow by approximately $380 million over the last 12 months and reached $2.2 billion as of the year end. With a 4.2% book yield, the portfolio is producing strong recurring income. All in all, we produced $116.8 million of comprehensive income for an ROE of 11.1%. This result is below our mid-teens cross-cycle target and our initial expectations for the year, but is a reasonable return after generating a loss during the first half of 2025. Compared to the prior year, our net tangible assets per share increased 11.9%, including dividends, reaching $7.14 or £5.30 per share. We returned $59.4 million to shareholders through dividends and repurchased 2.7 million shares for $12.5 million through our authorized share buyback program, which has continued into the new year. for which authorisation expires at the May AGM, where we will seek renewed authorisation. Our balance sheet remains strong and our estimated BSCR of 252% at 31st December leaves us well capitalised. Turning to our underwriting results for the year, we continue to grow our top line at a steady pace during 2025. our growth was driven by a strong increase in casualty of 23%. Throughout the year, casualty rates remained firm and we deployed our capacity where we saw the best opportunities. Property grew a modest 2% and specialty was down 4% as market competition increased over the course of the year in both of these segments. Our balance between property, casualty and specialty has shifted slightly reflecting the strong casualty growth during 2025, which is now almost one third of the portfolio. Overall, risk adjusted rates reduced by 3% for the year, reflecting a 5% rate decline in both property and specialty segments, while casualty pricing was more firm and increased by 1%. Industry capacity continues to build with both traditional and alternative capital generating strong retained profits over the last three years, despite elevated loss activity. This additional capacity is being used to pursue growth strategies and driving more competition in the market. Our 2025 undiscounted combined ratio of 101.5% compares to 97.1% in the prior year. Our result was heavily impacted by the January California wildfires, which added 15.3% to the ratio. We have taken steps to remedy this in the future, which I will touch on in a few minutes. Property gross premiums written increased by $14 million to $659.4 million for 2025, representing a 2% growth over the prior year. After several years of strong growth and rate increases, growth has slowed as price softening over the course of the year. Capacity continues to build, driven largely by retained earnings for both traditional reinsurers and alternative capital looking to expand their business. This led to a 5% reduction in risk-adjusted rates on our renewal portfolio. Pricing has come off peak levels but remains adequate in our view. We will approach the market with discipline as we look to gradually rebalance the portfolio. Our undiscounted combined ratio for the property segment was 97.1% and increased from 90.2% in the prior year. The higher combined ratio primarily reflects our net exposure to the California wildfires and to a lesser extent, U.S. convective storms. The Atlantic hurricane season was notably active, producing three category five storms. However, none made landfall in the United States, contributing to a strong underwriting performance in the second half of the year. During the year, Angus Hampton was promoted to head of casualty. He and the team had a strong year engaging with clients and finding growth opportunities. Casualty growth premiums written increased $73.4 million to $392.3 million for 2025, representing a 23% growth over the prior year. Our growth has been focused on areas of the casualty market that are experiencing stronger pricing, such as US general third-party liability. We have deepened our support for partners that are taking a disciplined approach to managing the cycle. We also wrote some new business that complemented our existing portfolio. Across this segment, rates have generally remained stable after inflation, and our risk-adjusted rate change was up 1% during 2025. Pricing varies broadly across different casualty classes, and we are carefully watching the areas of the market that could show signs of improvement. Capacity for casualty business is generally stable. The industry continues to face challenges relating to prior year reserve development, which has helped maintain more stable pricing and terms and conditions. Our undiscounted combined ratio for 2025 was 99.3%. In casualty, we have maintained our consistent approach to reserving, which we regard as appropriate given its long-tail nature. The growth in our casualty book has also contributed to our strong cash flow and growing investment portfolio as we hold reserves against this business. This has positively impacted our investment leverage and ROE contribution from the portfolio. Specialty growth premiums written decreased $7.1 million to $191.3 million, representing a 4% decline over the prior year. Our contraction in gross premiums written in specialty reflects our disciplined approach to more competitive conditions, driven by overcapacity in the market. The market has shown growing appetite for specialty business over the last year due to the margin potential and the non-correlating nature of the risks, and this has attracted new entrants. We have come off business where prices have softened or commissions have increased meaningfully. Across our specialty business, risk-adjusted rate change was minus 5% during 2025. A specialty is made up of many different classes with differing price dynamics. However, softening has become more broad over the course of the year. There are a few classes where pricing has remained firm, such as aviation and some multi-line accounts. And we will look to deploy our capacity in areas which demonstrate the best margins. Our undiscounted combined ratio for 2025 was 100.3% and increased from 95.8% in the prior year. The specialty segment was impacted by a greater frequency of risk losses in 2025, including aviation events. A small proportion of the California wildfire also sits within the specialty book. Our team had another successful January renewal season. We worked hard in the lead up to renewals, in essence, beginning at Monte Carlo in September, spending significant time with clients and brokers to clearly communicate our appetite and make sure we receive a strong flow of business. Our reception in the market was stronger than it has been, and we saw a significant number of attractive new and renewal opportunities for our portfolio. As expected, pricing was more competitive at the January renewals, with overall renewal pricing down 5% across our portfolio. Property and specialty risk adjusted rates were down 7%, while casualty was down 1%. We have seen increased capacity in the market from traditional and alternative capital, particularly for property risks and specialty risks reflected in these figures. We have previously communicated our appetite to grow the balance of excessive loss within the property portfolio. We have started to write more excessive loss business and our treaty count has increased in this area. We have also found select new quota share opportunities with attractive pricing that we added to the portfolio. Our overall balance of excessive loss and quota share has not changed meaningfully as this is an ongoing process that will take time. Casualty conditions remain more stable. Primary rate increases in US general and third-party liability are starting to decelerate but continue to benefit from price corrections. In casualty, our team is working to identify new partners and opportunities to diversify the portfolio. At the January renewals, we wrote several new treaties and also increased our line size with select clients. Terms and conditions have generally remained stable for the US accounts. while international business has displayed more competition. Our casualty business is and will remain largely quota share, which is how Seedence approached the casualty market. In specialty, we saw an increase in new business, including excessive loss opportunities. We have remained highly selective of rates continue to soften at 1.1. Capacity remains strong, and we continue to see new entrants in the market, which has impacted signings. We participated on several new specialty placements, including a couple of new aviation deals where pricing has been lost. As we said previously, we expect the rebalancing of our portfolio to take several renewal seasons and we are pleased with the new excess loss opportunities that we've added to the portfolio. The market is dynamic and we are deploying our capacity based on the strongest opportunities we see rather than strictly following preset targets. As the market develops, we will adjust our appetite to find areas producing the best margin. Another critical piece of Conduit's transition has been our increased focus on reducing earnings volatility and better management of our net exposures. In 2025, we increased the size of our exposure management team. The team works hand in hand with underwriting and risk to monitor and manage our portfolio exposures, against preset tolerances for a variety of perils and regions at different return periods. With our results, we are disclosing new PML zones at the 100 and 250-year return periods. Our refined approach provides a more conservative and transparent view of exposures as they capture broader geographic zones. We believe this gives investors a more complete view of risk, particularly for extreme events. You will notice that we have experienced a year-over-year reduction in PMLs across almost all peak zone perils at both the 100 and the 250-year return periods. This primarily reflects our expanded retrocession coverage and increased limit that we purchased in January 2026. Our retrocession program also provides improved protection from secondary perils. which includes cover for wildfire, convective storm, floods and freezes. The California wildfires in 2025 highlighted the need for us to have more comprehensive coverage for these types of events. In 2025, we purchased additional retrocession cover following the wildfires to specifically address coverage for secondary perils. Our retro spend has increased for 2026, with this increased protection, but we believe that we have a program that will reduce earnings volatility and better protect our balance sheet from extreme events. As an example of this, if we apply our 2026 retro program to our gross loss for California wildfires, we believe our net loss would be reduced by at least 50%. I will now hand the call over to Elaine to go through our financial and investment performance.

Thanks Neil. The California wildfires in January of 2025 gave the industry a bumpy start to the year and Conduit in particular felt the effects of that event and experienced a larger loss than we would have liked for that type of event. The rest of the year was, however, relatively quiet for us from a loss perspective. Our investment portfolio performed well and we also had a benefit from tax credits from recent legislation passed in Bermuda, our sole location of operations. All in, we produced a reasonable ROE of 11.1% in a challenging year. We recorded $1.24 billion of gross premiums written for the year compared to $1.16 billion for the prior year, almost a 7% year-on-year increase. Our reinsurance revenue, which broadly speaking is IFRS 4 gross premiums earned, less seeding commissions, was $897.1 million for the year, compared to $813.7 million for the prior year, a 10.2% increase year-on-year, reflecting our continued but moderating growth strategy. As you will see in our segment notes or financial statements, we classed some business this year between our three divisions. After those reclasses, all three divisions still show growth in reinsurance revenue, with property and casualty showing growth in gross premiums written, and specialty slightly down on the prior year. Overall, the growth year-on-year reflects our view on the markets. Heading into 2026, we do expect growth to moderate further as the market softens, although pricing remains broadly adequate and there are plenty of opportunities to pick our way through. Seeded reinsurance expenses, which you can see in our R&S and are essentially our seeded premiums earned excluding reinstatement premiums, were $119.1 million compared with $93.7 million for the prior year. Our outwards cover has increased year on year as the Emirates book has grown in addition to price increases at the January 1, 2025 renewals, plus additional cover purchased during the year to address secondary peril exposures. That seeded reinsurance expense brings our net reinsurance revenue to $778 million for 2025, versus $720 million for the prior year, 8.1% year-on-year growth. On the loss side, 2025 was another active year in terms of industry losses, but with a different makeup of those losses than in 2024. where 2024 losses resulted from a broad mix of events, 2025 was very much characterised by the January California wildfires. Our undiscounted net loss after reinsurance and reinstatement premiums for that event was $119.1 million, a 15.3% impact on our undiscounted loss in combined ratios. For the prior year across Hurricanes Helene and Milton, we had a net impact after reinstatement premiums of $68 million, which had a 9.4% impact on our undiscounted loss and combined ratios. Our net undiscounted loss ratio for the year was 89.9% versus 84.4% for the prior year. The difference being driven by the larger impact of the California wildfires this year versus the numerous smaller events in 2024. Our net discounted loss ratio was 77.5% versus 73.3% for the prior year. you can see a higher impact from discounting on the 2025 ratio as compared to the 2024 ratio, driven primarily by the higher loss ratio. Just a reminder here that we made a policy decision to use opening rates to discount our non-specific incurred losses, but date of loss for material-specific events. Our combined reinsurance operating expense and other operating expense ratios were 11.6% versus 12.7% in the prior year. In the fourth quarter of 2025, the Bermuda government passed legislation introducing tax credits for companies that have a substantial presence and investment in Bermuda. Conduct benefited from this new legislation and we recorded credits of $6.9 million in our income statement, offsetting reinsurance and other operating expenses. Adjusting for the tax credits recorded this year, the ratio would be 12.5%, broadly in line with the prior year. Our combined ratio on a discounted basis was 89.1% versus 86% for the prior year, and on an undiscounted basis was 101.5% versus 97.1%. Our net reinsurance finance expense for the year was $77.2 million versus $30.8 million in the prior year. Our interest accretion was $61.1 million compared to $37.6 million in the prior year. and the impact of changes in discount rates was an expense of $16.1 million versus a benefit of $6.8 million in the prior year. You can see these numbers in our R&S and our financial statements. The accretion has increased in line with expectations as a relatively new company with growing reserve balances. We also had higher incurred losses in 2025, so more discount from those to unwind during the year also. The re-measurement to current discount rates reflects the changes in yields. Our net investment return was 6.7% for the year versus 4% in the prior year. I'll come on to investments in a bit more detail in a moment on the next slide. But just to wrap up on this one, our comprehensive income for the year was $116.8 million for an ROE of 11.1% versus the prior year of $125.6 million and 12.7%. So here's the investment bit. Book yield is now at 4.2% compared to 4.1% at the end of 2024, so reasonably consistent. As our asset base and investment leverage grows, the portfolio earns more income. Investment income is $80.7 million compared to $65 million in the prior year. With the reduction in yields in the year, we booked a net unrealised gain of $39.2 million versus $1 million in the prior year. As noted on the previous slide, our investment return for the year was 6.7%. Otherwise, around the portfolio, we continue to nudge duration up a little, but remain relatively short, and our focus continues to be on maintaining a high-quality, highly liquid portfolio. Duration is currently 2.8 years versus 2.7 years on our net reserves. Average credit quality is AA, and you can see the usual pie chart here with our asset allocation. This slide demonstrates what I just mentioned. You can see that as the business continues to grow and we remain highly cash generative, our invested assets also continue to grow. As our portfolio has become higher yielding over time, we produce more income, and as our investment leverage increases over time, that contributes more to our ROE. I'll now hand back to Neil for additional comments.