Conduit Holdings Limited

Good day, everyone, and welcome to Conduit's Q1 2026 Trading Update. Thank you for joining us today. Joining me on the call are Neil Eckert, Chief Executive Officer, Elaine Whelan, Chief Financial Officer, and Stephen Possilwhite, 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, and welcome, everyone. As mentioned on our 2025 results call, Stephen joined in January, and I'm delighted to have him with us today. As usual, today's update focuses on our top-line underwriting experience during the quarter and our view of the market, with Steve providing more details of each of our segments. Elaine will then cover the financial and investment highlights, including a review of our capital management strategy. In the first quarter of 2026, we continued to identify select areas for growth and increased growth premiums written by 4.9% over the prior year. Growth was again led by our casualty segment where risk adjusted pricing has remained stable. The quarter saw heightened volatility in investment markets following the outbreak of the conflict in the Middle East. Against this backdrop, we were pleased with the performance of our investment portfolio which generated a 0.3% return during the first quarter, despite the volatility and higher fixed income yields and spreads. Importantly, our managed investments continue to grow by over 100 million since year-end, and over 400 million during the last 12 months, reaching 2.3 billion. This added scale will continue to support our earnings going forward. Capital management remains a focus for us as market conditions soften. During the first quarter, we repurchased $22.9 million worth of shares, and this month we substantially completed our previous $50 million buyback authorization. We remain confident in the strength of our balance sheet, and the Board has authorized a new buyback program demonstrating our focus on shareholder returns. Turning to our top-line underwriting performance for the first quarter, our portfolio continues to grow into areas of the market where we have found attractive underwriting opportunities. We achieved 4.9% growth in gross written premiums, reaching $430 million in the first quarter. Our overall growth rate continues to moderate given increasing competition in the market. but we have identified select opportunities that align with our appetite, primarily in the casualty segment. As we discussed on our last call, our reception in the market was strong at 1.1, and this performance is a direct result of the hard work of the team leading up to the renewal period. Market capacity continues to increase, driven by the strong retained earnings of the industry over the last several years. Prices are softening and we observed a risk-adjusted rate decline of 5% for the first quarter. Property and specialty markets are experiencing more intense competition and rate softening, but pricing overall remains adequate in our view. Casualty rates are more stable, broadly keeping up with lost trend, and we have seen strong opportunities to grow that portfolio with existing and new seedings. From a loss perspective, the first quarter of 2026 was more benign than the prior year, which included the California wildfires, but was in line with longer-term averages for insured catastrophe losses for the industry. The market is also dealing with the rise in geopolitical uncertainty and the conflict in the Middle East. The event is ongoing and could impact several areas of the market, depending on the extent and duration of the conflict. We do have exposure to the conflict in some of our specialty classes and have recorded an initial loss estimate based on the latest information, which is not material to conduit. With that, I will hand over to Steve for a deeper dive into our market experience across our segments.

Thanks, Neil, and good morning, everyone. It's great to be with you today. As Neil mentioned, I joined the team in January this year and have been working in the industry for nearly three decades. I'm very happy to bring this experience to the CEO role at Conduit. Over my career, I've served in senior positions within underwriting, risk management, and actuarial functions. I spent the first few months getting to know the team and the portfolio and have been pleased with the strength of the people and the opportunities for Conduit going forward. In Q1, the team selectively renewed or secured deals that aligned well with our strategic objectives, primarily seeking to protect our margins and improve earning stability. Turning to the property segment, gross premiums written increased 1% over the prior year period to $248.8 million. This modest growth reflects our success of securing new business and increasing shares on well-priced accounts. while reducing exposure or exiting treaties with poorer performance or terms that did not match our technical pricing standards. We continue to see a strong flow of business opportunities and submissions, and we are carefully picking our participations. As we expected, rates continued to soften in the quarter, and risk-adjusting rates were down 9% across our property portfolio. The rate softening comes on the back of several years of strong rate increases and profitable results for the industry. Despite the recent rate softening, we believe the pricing generally remains adequate and we continue to find select opportunities. Softening was most notable within property catastrophe reinsurance lines driven by robust returns over recent years, increased capacity and a relatively benign loss activity for the market. We expect these softening trends to continue through the mid-year renewals and we will remain nimble and proactive in the competitive environment to target well-priced business. Turning to casualty, in Q1, the team continued to focus on expanding in classes where rate dynamics remain robust and with seasons that have demonstrated track records of prudent cycle management behaviours. Our casualty team has found select new business opportunities on top of strong renewals The increase in this segment complements our short-tail property and specialty business and enhances overall portfolio diversification. For the first quarter, we reported 109.7 million of gross premiums written, representing a 23% increase over the prior year quarter. Expiring business was generally renewed at similar shares while we made deliberate decisions to exit underperforming treaties. where returns or terms were less attractive, supporting ongoing portfolio optimization. Growth for the quarter was largely attributable to U.S. general third-party liability, complemented by incremental gains in smaller subclasses that contributed to portfolio diversification. The rating environment remains attractive in our view, although some classes continue to demonstrate firmer prices than others. We continue to focus on areas of the casualty market with sustained pricing momentum. During the first quarter, risk adjusted rates were down 1% after adjusting for inflation expectations. Looking ahead, we remain mindful of industry loss trends, including some signs of increased loss frequency and past legacy concerns in certain areas. Against this backdrop, our focus is on carefully selecting our partners, improving diversification, and expansion with our preferred partners across complementary classes. Turning to specialty, competition has increased and we have scaled back the portfolio slightly to begin the year, with premiums reducing 4% or $3 million compared to prior year to $71.8 million. Consistent with our plans, we have been able to leverage our strong trading relationships and quota share participations to successfully write some new higher margin excess of loss business. This gradual repositioning will take time, but we expect it will help support our margins as the market softens. Risk-adjusted rates were down 7% in the quarter. The specialty market has become competitive, and the team stepped back from a number of deals that did not meet our expectations or requirements. Instead, the team has prioritised protecting margins and ensuring written deals are adequately priced with the required terms and conditions. loss impacted contracts and selected classes where there has been loss activity have experienced firmer pricing, such as marine and aviation. We have written a few new treaties in these areas. The first quarter has been quite active from a risk loss perspective, in addition to the ongoing conflict in the Middle East. We don't expect the direction of the market to change, but there is potential for enhanced geopolitical risk awareness and the ongoing conflict to create further opportunities. we will stand ready to respond should the opportunities align with our appetite. I will now hand over to Elaine to go through our financial and investment highlights.

As you've heard, our growth continues into our sixth year of operations, albeit now at a much slower pace, as you would expect given the rapid growth we experienced in our earlier years and also market conditions at the 1-1 renewals. We wrote $430.3 million of gross premiums written in the first quarter of the year, compared with $410.2 million in the first quarter of 2025, a 4.9% increase year-on-year. We typically write the majority of our book in the first half of the year, certainly by 1-7, and we have tried to front-load our book a little given our market outlook, so we would expect that first quarter growth rate to moderate a bit by the half-year, although we still expect to see growth for the year. Note that our growth premiums written exclude reinstatement premiums, as they are not deemed to be revenue under IFRS 17, but are included within reinsurance service expenses as a loss-related amount. Our reinsurance revenue was $240.3 million, compared with $230 million in the prior year, a 12.8% increase year-on-year. There hasn't been any significant loss activity in the quarter that has impacted the company. We do expect to pick up some losses related to the US military campaign in Iran, but we don't expect these to be material to results based on the current information available. Given that latest information, I would describe the loss level from the ongoing conflict as manageable and within their earnings expectations. Otherwise, not much report on the loss front and prior year specific loss events are broadly stable. On the investment side, the portfolio yield offset the negative impact of the increase in yields in the quarter and we generated a return of 0.3%. Book yield is 4.2% in line with year end and March 31 last year. We remain relatively short duration and maintain our focus on a high quality, highly liquid portfolio, particularly given the recent volatility in the markets. Duration is currently 2.8 years on both our investments and our net reserves. Average credit quality is AA and you can see the usual pie chart here with our asset allocation. and the only change to note is a small bank loan portfolio that we have started this year to help to diversify the portfolio and maintain yield. Otherwise, no real changes from prior quarters in that or our strategy. We started to include this slide on capital last year to explain how we think about capital. Our focus, first and foremost, is on maintaining sufficient capital to maintain our ratings and to support our underwriting portfolio. We then carry a buffer for opportunities and any other eventualities. Anything over and above that is where we consider capital returns or where else to deploy the excess. The option or blend of options depends on a number of factors including market outlook and or share multiple. This month we substantially completed the $50 million share repurchase authorisation that our board approved last year. This year, our board have approved another programme and we intend to execute that as and when appropriate before our 2027 AGM. I'll now hand back to Neil for closing comments.

Thanks Elaine. In closing, we remain focused on delivering shareholder returns and will continue to execute our strategy to support that objective. We continue to make meaningful progress to stabilise the business. A key driver has been the renewal of our outward retrocession programme at 1-1, with broader coverage for peak and secondary perils, reducing our net exposure to tail events. Board and leadership strength is an ongoing focus, and we are pleased that Steve Potterwhite has now settled in the CUO role and working well with his team. We have continued to make progress with our regular board succession during the first quarter. Elizabeth Murphy has retired from the board and I would like to thank her for her dedicated service. Elizabeth was a founder director and has provided valuable guidance and insight as audit committee chair during her tenure. Sadly, Stephen Redman, a tremendous asset to the board, passed away in March. His significant contributions and kindness will be missed by all those who had the privilege of working with Stephen. During the quarter, Nicholas Schott was appointed board chair. and was joined by three new independent non-executive directors, Richard Lightowler, Peter Mullen and Penny Shaw, each bringing strong insurance industry experience. The market is softening, but we view most areas as remaining rate adequate. We found select growth opportunities in the first quarter, primarily within our cashless segment, and will continue to adjust in response to changing conditions. Our underwriting business is supported by a relatively conservative and growing investment portfolio that is now $2.3 billion. This increased scale will support investment income and returns going forward. Capital management remains a priority. We substantially completed the initial $50 million share buyback program and have continued to pay a consistent, attractive dividend. The Board has authorised another share buyback programme, reinforcing our focus on capital efficiency and shareholder value. Looking ahead, while we expect competitive market conditions to persist, we remain confident in our strategy, balance sheet and underwriting approach to generate value for shareholders. Thank you for your time and continued interest in Conduit. We would now be happy to take your questions.

If you are dialed in to the call and would like to ask a question, please press star followed by the number one on your telephone keypad. We will pause for a moment to assemble the queue. We'll take our first question from Michael Cristobal from Buchenberg. Please go ahead.

Yeah, hi. Thanks for taking my questions. So I have a couple. First one, I guess it's on volume. Most of the issues I've reported so far have highlighted reduction in volume. Condit actually managed to grow premiums 5%, led by Casualty at 23% year-on-year. If you can give us a bit more color around that, behind the drivers, specifically maybe for Casualty, and perhaps talk a bit about the risk profile, that would be great. And then the second one is on Retro. Neil, you mentioned the renewal of the Retro program. but that also should mean that there's going to be a benefit from lower pricing. If you can elaborate maybe about where that benefit will show up and also, I guess, for the new structure of the retro, where it stands and, I guess, how it helps going forward, that also would be great. Thank you.

Steve, if you take the first question on the inwards and then I'll deal with the retro.

Sure. Okay, thanks, Michael. Thanks for the questions. You know, I'm curious, Steve, clearly the main driver of the growth comes from casualty. And really there, you know, we're kind of benefiting a little from our scale and nimbleness. So we're able to be really selective in what we target for growth there. And what I would say is there's kind of three levels to that selectivity. The first is we're able to look underneath casualty, which is a very broad church, and we identify there a number of lines of business which are continuing to be really quite price-adequate. and are the hardest. In particular, I would highlight USGL, where that line of business is kind of in a later stage in the cycle than many, so it's still in a harder state, and we've been able to focus and really be very selective in terms of that line in particular. The second area of selectivity, I guess, is our preferred partner approach, where we look at our business and our trading partners. We classify some of them as preferred partners, We do that because we believe they are the very strongest in the areas that we target. The very strongest in terms of how they do their underwriting and in particular I guess at this stage of the cycle how they think about cycle management so we can see and they can demonstrate that they are being good actors in terms of managing their portfolio and therefore give us confidence that we can support them. So there are two areas and the third area of selectivity is really diversification so we're able to target classes that generate the highest level of diversification and therefore use the lowest capital and so get the best returns for us and kind of that nimbleness has enabled us to grow. The other thing I would say is it takes time to get on some of these placements and we have been very consistent with how we traded with a number of these partners and built up a very strong relationship and very focused relationship with them and that's really standing us in good stead enabling us to grow in casualty. Okay. Thanks, Steve.

On the retro program, we have benefited from more competitive conditions, but the principal thing we did was set out to eradicate basis risk, which you will be aware was the cause of the California issue in 2025. So we buy a tower of full HOLA count, both for peak and secondary perils. which we don't publish the limits that we place for the actual retention because that's commercially sensitive. But what we do give is information on our PMLs and risk tolerances. The overall, so we get better value, a more comprehensive and complete program. We are managing our exposures now both from a capital perspective from an earnings volatility perspective. The cost will not be less than last year because the account has grown. And so although we, in my view, brought significantly more better value, we will have paid more than last year. But as I say, I stress, I would emphasize the word values. And that those premiums will come through when we financially report both at the entrance and the year end.

Our next question comes from the line of Abid Hussain with Panmure Liberum. Please go ahead.

Oh, hello. Hi, everyone. I've got three questions to Cam. The first one is on management changes. Just wondering with the new chief underwriting officer and a new chairperson, have there been any changes to the risk appetite or indeed the underwriting processes? And the second question is on the pricing trends at the 1st of April or after the end of the quarter. Just wondering if you observed any meaningful loosening to the T's and C's, the terms and conditions within the contracts renewing after the quarter end. And then just finally on your capital ratio and the target range, thank you for sharing that. That's very helpful. So the BSCR ratio is bang in the middle of your target range. Are you comfortable at that sort of level in the current market conditions, or would you let it drift lower from here? Thank you.

Thanks, David. I'm going to let Steve do the one for rate. I'm going to let Elaine comment on capital. I will start with management changes. I mean, the whole period since I took over has been one of change. And in every regard, and by one instance I'll come on to, it's been about positive change and strength and improvement. So, you know, it's been a fascinating 12 months from my perspective. But we have strengthened from the top down. The main board, we've strengthened, in my view, the underwriting processes. There's one thing I will comment on. As regards to Elaine, that is a genuine retirement. She is a friend of this company, will be fully engaged and working here until September. So that is different from a lot of the other change that we have put into place, but we are strengthening this company across the board. As it relates to risk appetite, the new arrivals, We have published our risk appetite in terms of PMLs and catastrophe, and that continues to be conservatively managed. And so really, my takeaway theme is it's gradual change with a view to positive and strengthening, and that's where we are. Steve, over to you for one more.

Yeah, so I think the question related to changes in pure rate change. I mean, if there is one kind of slight silver lining to a market which is softening relatively rapidly, I would say there is discipline in T&Ts. So we haven't really seen structures materially changing. We haven't seen yet, I guess, the advent of additions such as terrorism and MBCR and other things coming into property policies any more than we had historically. That's not to say that that couldn't change as we go forward. It's something we're very alive to and we'll be very much on top of as we go through the underwriting process.

Hey, Abed. Just on the capital side of things, we are very comfortable where we're sitting just now and I think we didn't expect to see that change too much from that position. If anything, hopefully that would come up a little bit as we retain the earnings and manage our risk through risk selection and managing our PMLs and the extra reinsurance we've got there as well. I would just point out, though, that that is only one area of focus for us. It's the one that gets published because that's the one that everyone else puts out there. But we also pay attention to the rating agency models and our own internal capital model as well. So there's quite a lot that goes into how we think about capital and our capital requirements.

Thank you.

Our next question comes from the line of Andreas van Emden from Fuel Home. Please go ahead.

Yes, thank you, and good morning. I just had a question around the investment portfolio. If I look at the investment leverage, the investments against equities, it's around two times, and I just wondered whether – if you take a three-year view, whether this is going to be sort of a constant ratio of investments to equity, or as you build out your casualty portfolio, as you've brought that into one, whether that should increase over time.

Do you want to comment or do you want me to change?

Just one question, Andreas. It's most unlikely. Yeah. Or is it one question for now? I think in terms of where our leverage goes, a lot of it depends on what we're doing in the capital side of things as well. If we are making capital returns, then that's obviously going to impact how much that portfolio can grow. But we are cash generative and the reserves have been building. As a business and exchanges, at some point that might cap out. We haven't really given any guidance on that. So it does depend on where... where the market goes, what business fund you're writing, the business mix, and how much we're returning in capital to shareholders as well.

So, Andres, I'll just add to that. I think the clue is in the size of the account in the early years. And so once the account, as Elaine has observed, once the account in the early years have fully developed, then the growth in gross assets will plateau. But so long as we're growing the casualty account and the current years are bigger than the prior, than the old years, then you will see a growth in the amount of reserves that we carry because the book has a tail of up to seven years in terms of reaching maturity. So I would expect to see our gross assets continue to grow.

Okay. Okay. Thank you very much. Thanks.

Our next question comes from the line of Ben Cohen with RBC Capital Markets. Please go ahead.

Oh, hi there. Good morning. Good afternoon, everyone. I wanted to ask two things. Firstly, just interested in terms of the margin that you think you're writing new business at. And maybe you could put that into the context of, I guess, I'm not sure if it's now a historic target. to hit a sort of mid-teens ROE over the course of the cycle, just sort of where you are against that sort of target. And the second thing is if you could give any outlook as to how you see the market developing into the June, July renewals, any particular aspects that you're looking out for there or areas you're choosing to focus on. Thank you.

Right. Steve, if I... pass over to you to comment on the mid-year renewals and market outlook.

Yeah, so on the market outlook, obviously we're right in the throes of that right now, June and July. We don't really see a material difference to what we've seen in the first quarter of the year. Property is probably going to be off slightly more, and we've kind of predicted that by, to some extent, front-loading our property exposure to 1st of Jan. So, you know, that we expected. Specialty and specialty, I think, is really more of the same. It will be very similar to what you see within this pack.

Okay. And obviously, when we are writing new business, we have an internal target margin, which we don't I couldn't expect out of their business. But what I will comment on, on the mid-teen ROE, that figure was something that emerged around the time that the company was launched. What we have seen is people getting in hard markets into the 20-plus ROEs. And we hit 20-plus in 23. And a lot of people have been achieving returns in excess of 15, and the assumption being that that's a cross-cycle return, not a forecast for any one year in isolation. I'm obviously aware of where analysts forecast it for our company this year, and I'm not going to comment on that, but I think a decently run reinsurance business can post cross-cycle ROEs And this hard cycle has reinforced my views on that. What we've got to do as a company is execute.

Okay. Thank you. Our next question comes from the line is Joseph Smith, Smith Autonomous. Please go ahead.

Hi there. Thanks for taking my questions. The first is in the property book. I just wanted to get sort of a flavour of how much of the growth was split between the excess of loss versus quota share and kind of a broader update on how the recalibration towards a 50-50 mix in that book is going. And then the second question, I was hoping to kind of square off um the chart that you have on slide 11 on on capsule um with your target range of two to three hundred percent um i believe in the past you've said that the required capsule range uh required capsules is 170 um and so if the target solvency range is 200 to 300 can we sort of take away that the target headroom is 30 percent um and then you know based on the fact that anything in excess of 200% can be considered excess capital. Thank you again for taking the questions.

I'll start on the property QS versus Excel, then I'll pass over to Elaine to comment on the capital. I don't think I'm really familiar with where the 170 figure ever came from. But I'll let Elaine deal with that. So we always said that the transition to excessive loss would be a medium-term project and could take two to three renewal seasons. That process is underway, and we have written a significant amount of new excessive loss business. I'm very pleased with the showing that we've had. And what we will do is it is work in progress. I mean, effectively... what we've had is one significant part of the renewal book at 1.1 has come up. 1.4 was good. We do not, at this stage, publish a split, but over time we will give granular information. But what I said before was it would be a medium-term issue. We have come off quite a lot of the quota share issues, because it relates to excessive loss and we are growing the open market. But I'd rather report on sort of facts and information once we have achieved that. And I reiterate what we said before. It is a two to three renewable season project to get to the split that you referenced. That split would be a target for property and business. That is the way that market operates. Elaine, I'll pass over to you to discuss the capital.

Not too sure about the 170i, maybe we can chat about that offline and see where that's coming from, but I think maybe just to put into context what we're trying to see on that slide is how we think about capital, and it is not an exact science. There are a few different models that we look at. The regulatory one is only one of the models that we look at and we tend to focus more on the rating agency model and our own internal capital model and so we've kind of when we've calibrated those models against each other and you know where we sit in our business model relative to peers all that kind of stuff the 200 to 300 percent range is where we've come up from the regulatory perspective and I wouldn't read too much into the fact that we're bang in the middle of that range this year it will move around there And that is driven by market opportunity. And we can be at the lower end of that, we can be at the higher end of that. And that may or may not trigger a conversation around whether we're doing capital returns or not. But it's very much about working out what our required capital is for the book that we want to underwrite. and then putting that buffer on top of there, which I think is a fairly common approach in the market and carrying some headroom over that. And that gives us the flexibility to respond to anything we need to respond to. And once we get it over those levels, that's when we're starting to have conversations around what we do with that extra capital that's there that we're not using for the business. Are we seeing a new line of business that we want to go into? Are we looking to deploy it into another area? Those kind of things, or whether we want to return that. So it's quite an involved process. process. It's not just driven by a hit a certain percentage and then anything over that gets returned.

Okay. Makes sense. Thanks for your responses. And sorry if I may just have one very quick follow-on. In terms of the buyback impact on solvency last year, can you give us a sort of rough range of how many points of solvency that had an impact on?

I don't have that number to hand you.

Okay. I mean, the one thing that I would say is that last year we did come in in excess of an 11-point ROE at the end of the day. Whatever it looked like in the mid-year, it was slightly better a year, and that would obviously have helped the balance sheet and the ratios a little bit. Okay, let's move on.

Maybe just one thing to add to that. I think in terms of our overall capital base, 50 million isn't really that big a number, so it's not a big percentage. It's not a big impact.

Yeah. Okay, Joe. Thank you.

There are no further questions on the conference line. I will now turn the call over back to Neil for closing remarks.

Thank you. So we're now... Well into Q2, which has continued as Q1 left off. We have affected a lot of change, and we're now getting through to the phase of strengthening the business in key areas, particularly operations and underwriting. I'm personally pleased with Q1. I look forward to presenting our interim results in late July, and thank you all for your interest. Cheers.