Conduit (CRE) H2 2024 earnings summary

Executive summary

• Gross premiums written grew 24.8% year-over-year to $1,162.4 million, with all segments—property, specialty, and casualty—showing growth, led by property and specialty.

• Comprehensive income for 2024 was $125.6 million, resulting in a return on equity (ROE) of 12.7%, despite a challenging year with elevated catastrophe losses.

• Maintained a strong balance sheet with $1.05 billion in total capital and no debt at year-end; AM Best financial strength rating upgraded to positive outlook.

• Final dividend of $0.18 per share declared, totaling $0.36 for 2024, with a total distribution of $59.5 million.

• The California wildfires in early 2025 are expected to result in a net loss estimate of $100 million–$140 million, but management still targets a low to mid-teens ROE for 2025.

Financial highlights

• Net investment return was $66.1 million (4%), down from the prior year due to lower unrealized gains, but with higher net investment income from a larger portfolio.

• Net tangible assets per share increased to $6.70, including dividends paid.

• Net reinsurance revenue rose 28.5% year-over-year to $813.7 million, reflecting strong growth across all divisions.

• Discounted combined ratio was 86% (up from 72.1% in 2023), with the increase attributed to higher catastrophe activity.

• Shareholders’ equity increased 6.5% to $1,051.2 million.

Outlook and guidance

• Management expects to achieve a low to mid-teens ROE in 2025, assuming normalized catastrophe activity for the remainder of the year.

• Market expected to respond to January 2025 Southern California wildfires, likely driving rate increases in property and catastrophe lines.

• Quota share treaties positioned to capture post-loss rate increases immediately.

• Guidance for a normalized combined ratio in the low 80s is being reassessed due to the impact of the California wildfires.

• Balance sheet and capitalisation support continued premium growth and potential for further RoE enhancement.