Conduit Holdings shrugs off catastrophe losses
Despite rising catastrophe claims, Conduit Holdings, the Bermuda-based reinsurance business, has reported a jump in gross premiums written for the 2024 financial year.
Gross premiums written reached $1.16bn (£917m), a 24.8 per cent increase on the prior year, while the firm delivered a return on equity of 12.7 per cent, down from 22 per cent in 2023.
Losses from major catastrophes Hurricanes Helene and Milton hit earnings, with the group’s combined ratio rising to 86 per cent on a discounted basis up from 72.1 per cent in 2023.
Reinsurance revenue rose 28.5 per cent to $813.7m (£642.8m), while net investment income increased by 57.4 per cent to $65m (£51.4m).
Conduit’s chief executive Trevor Carvey said: “From a standing start four years ago, we have delivered a business which produced $1.16bn of gross premiums written in 2024, an increase of 24.8 per cent on 2023. In a high catastrophe year, the business produced a 12.7 per cent ROE, after having delivered a 22 per cent ROE in 2023,” Carvey said.
“Our results also illustrate the continued and growing cost efficiency of our business model and an increasing contribution to profitability from investment returns as our asset base grows. The company is well capitalised, and we expect to continue to build on these achievements as the business grows and matures.”
California wildfires to hit earnings in 2025
The January 2025 California wildfires are expected to be one of history’s costliest insured catastrophe events.
Conduit has estimated an undiscounted ultimate loss of between $100m and $140m (£79m-£110m) net of reinsurance recoveries. The cost estimate is marginally above the City’s estimate of losses for the group.
Abid Hussain, insurance sector analyst at Panmure Liberum noted: “At the industry level, if recorded as $50bn loss, these wildfires are likely to result in a top five globally insured loss natural catastrophe ever incurred.
“Despite this, the industry and Conduit Re have absorbed these losses without calling on additional capital. We think these losses will be supportive of pricing power over the remainder of 2025 and 2026.”
The firm noted a “solid January 2025 renewal period” with extensive support from existing clients. Although risk-adjusted rate changes, net of claims inflation, were down three per cent, pricing and underwriting terms remain attractive.
Conduity maintained its dividend policy, declaring a final dividend of $0.18 (14p) per share, bringing the total for 2024 to $0.36 (28p) per share, representing a 12.9 per cent increase including dividends paid during the year.
Tangible net assets per share rose to $6.70 (535p) from $6.25 (491p) in 2023.
“Conduit Re is a pure-play reinsurer with readily available capital that it is deploying into favourable conditions for an attractive return on equity.
“Unlike some peers, the returns do not need to be diverted to shore up legacy balance sheet issues, meaning these are available to deploy for growth and capital distributions. We continue to expect favourable reinsurance market conditions over 2025 and beyond,” Panmure summarised.