CRE Conduit Holdings Limited

Pembroke, Bermuda - 21 February 2024

Pembroke, Bermuda - 21 February 2024

Conduit Holdings Limited

("CHL" LSE ticker: CRE)

Preliminary results for the year ended 31 December 2023

Comprehensive income of $190.8 million; RoE of 22.0%

Strong year-on-year growth in gross premiums written of 49.6%; Combined ratio of 72.1%

Efficient business model, strong capital base, positioned for continued growth into favourable market conditions

CHL, the parent company of Conduit Re, a pure-play reinsurance business based in Bermuda, today presents its preliminary results for the year ended 31 December 2023.

Trevor Carvey, Chief Executive Officer, commented: "2023 was an outstanding year for Conduit Re, delivering comprehensive income of $190.8 million and an RoE of 22.0%. Across all three divisions, the underwriting teams navigated the market well, being focused in choosing their preferred spaces to play and allocating our capacity to those where we saw the best opportunities and returns.

We continue to benefit from a lack of legacy issues and our clean balance sheet has given us tremendous freedom to deploy exactly where we wish to.

Strong investment performance, particularly in the last quarter of the year, supported our underwriting efforts.

Entering our fourth year, we continue to deliver on our plans and the market landscape out there is offering up plenty of good opportunities for continued growth."

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¹ With the transition to IFRS 17, certain comparative amounts have been re-stated as if the standard had always been in effect.

² Estimated ultimate premiums written now exclude reinstatement premiums to ensure consistency with the IFRS 17 view of revenue.

³ Gross premiums written now exclude reinstatement premiums to ensure consistency with the IFRS 17 view of revenue.

⁴ With the transition to IFRS 17, certain comparative amounts have been re-stated as if the standard had always been in effect.

⁵ With the transition to IFRS 17, certain comparative amounts have been re-stated as if the standard had always been in effect.

Key highlights:

2023 Results

•   Comprehensive income of $190.8 million, representing a 22.0% return on equity for the full year

•   Combined ratio of 72.1% for the full year 2023 compared with 103.0% for 2022

•   Gross premiums written for the year ended 31 December 2023 of $931.4 million, a 49.6% increase over 2022

•   Overall portfolio risk-adjusted rate change for 2023, net of claims inflation, of 16%

•   Total reinsurance and other operating expense ratio of 13.9% for 2023 compared with 14.6% for the prior year

•   High quality investment portfolio with average credit quality of AA; book yield of 3.7%, and market yield of 5.1% (respectively AA, 2.4% and 5.2% for 2022)

•   Total net investment return of $70.6 million for the year ended 31 December 2023 which includes a net unrealised gain of $30.6 million, compared to a net investment loss of $52.8 million which included $67.8 million of net unrealised loss in 2022

•   Final dividend of $0.18 (approximately 14 pence) per common share. This takes the full 2023 dividend to $0.36 (approximately 28 pence) per common share in line with our stated dividend policy

•   As at 31 December 2023 Conduit Re's estimated Bermuda solvency capital ratio coverage ratio was 381% (2022: 404%)

Outlook

•   Conduit Re's focused and disciplined approach to underwriting resulted in continued growth at 1 January 2024:

•    Estimated ultimate premiums written of $582.4 million, +38% versus the 1 January 2023 renewal season of $421.2 million

•    Overall portfolio year-on-year risk-adjusted rate change, net of claims inflation, increasing by 3% at 1 January 2024

•    Very strong levels of renewing business with our key partners, complemented by high quality new business

•    Increased weighting towards property and specialty thanks to attractive underwriting opportunities in these segments

•    Continued selective approach to casualty lines to maintain stable combined ratio expectations year-on-year

•    Successful placement of outwards retrocession programme with diverse and high quality panel, complementing the June 2023 sponsored issuance of a $100 million three-year catastrophe bond

•    No material increase in our net PMLs at 1 January, which continue to provide a balanced risk versus reward profile

•   We continue to see high submission levels of attractive business and, being selective around lines, rates and structure, we continue to grow the portfolio significantly without sacrificing quality

•   With more attractive risk versus reward in the property and specialty segments, we are focusing our growth in these classes over casualty

•   Significant pipeline of unearned premium of approximately $500 million which will flow through in subsequent years

Neil Eckert, Executive Chairman, commented: "Conduit had an excellent 2023. The team's experience and deep market knowledge has delivered a fantastic performance and gained enduring support from clients and brokers alike. Market conditions remain attractive to support strong organic growth while maintaining a robust capital position."

Underwriting update

Premiums

Estimated ultimate premiums written for the year ended 31 December 2023:

Gross premiums written for the year ended 31 December 2023:

Pricing

Pricing levels and terms and conditions continued to improve in 2023 and we were presented with an increasing number of opportunities to deploy our capital into the areas and products that we target. The non-catastrophe elements of both property and specialty in particular provided opportunities for selective growth.

Conduit Re's overall risk-adjusted rate change for the year ended 31 December 2023, net of claims inflation, was 16%, and by segment was:

Net reinsurance revenue

For the year ended 31 December 2023:

For the year ended 31 December 2022:

Reinsurance revenue for the year ended 31 December 2023 was $633.0 million compared to $392.4 million for 2022. The increase in reinsurance revenue relative to the prior year is due to continued growth in the business plus the earn-out of premiums from prior underwriting years.

Ceded reinsurance expenses for the year ended 31 December 2023 were $76.7 million compared to $48.6 million for 2022. The increase in cost relative to the prior year reflects additional limits purchased due to the growth of the inwards portfolio exposures plus price increases on renewals. During the second quarter of 2023, Conduit Re sponsored the first issuance of a $100 million catastrophe bond by Stabilitas Re Ltd., which was placed successfully with strong investor demand. The resulting three-year collateralised reinsurance cover complements Conduits Re's traditional retrocession programme.

Net reinsurance service expenses

For the year ended 31 December 2023:

For the year ended 31 December 2022:

Net reinsurance losses and loss related amounts⁶

In an active natural catastrophe year for the industry, no major event loss, individually or in aggregate, had an outsized or material impact on Conduit during the 2023 year.

Our discounted net loss ratio for the year ended 31 December 2023 was 58.2% compared with 88.4% for the 2022 year, while our undiscounted net loss ratio was 68.0% and 94.7% respectively. The loss ratio for the prior year was impacted by our estimated ultimate net impact, on an undiscounted basis, from Hurricane Ian of $40.9 million and the Ukraine conflict of $24.6 million.

Our undiscounted ultimate loss estimates, net of ceded reinsurance and reinstatement premiums, for previously reported loss events remain stable.

Our loss and reserve estimates have been derived from a combination of reports and statements from brokers and cedants, modelled loss projections, pricing loss ratio expectations and reporting patterns, all supplemented with market data and assumptions. We will continue to review these estimates as more information becomes available.

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⁶ Reinsurance losses and loss related amounts less ceded reinsurance recoveries

Reinsurance operating expenses and other operating expenses

For the year ended 31 December 2023:

Reinsurance operating expenses includes brokerage and operating expenses deemed attributable to reinsurance contracts.

Total reinsurance and other operating expenses were $77.3 million for the year ended 31 December 2023 compared with $50.3 million for the prior year. The increase is due to the continued growth of the business and increased headcount.

The marginal increase in the reinsurance operating expense ratio was due to a larger proportion of Conduit's operating expenses being deemed attributable to reinsurance operating expenses as the business matures. The decrease in the other operating expense ratio was due to the additional costs attributable to reinsurance operating expenses increasing, while the majority of the decrease was due to the growth in net reinsurance revenue outpacing the increase in other operating expenses.

Net reinsurance finance income (expense)

For the year ended 31 December 2023:

The net reinsurance finance expense was $32.8 million for the year ended 31 December 2023 compared with income of $20.8 million for the prior year. The unwind of discount made up most of the expense in 2023, although there was some expense related to the reduction in discount rates in the latter part of 2023 as we re-measured at those lower rates. The opposite was true for the income in the prior year as discount rates increased significantly and we re-measured at the higher rates, but there was little discount to unwind.

Investments

In line with our stated strategy, we continue to maintain our conservative approach to managing our invested assets with a strong emphasis on preserving capital and liquidity. Our strategy remains maintaining a short duration, highly-rated portfolio, with due consideration of the duration of our liabilities. Our investment portfolio does not hold any derivatives, equities, alternatives or emerging market debt.

The investment return for the year ended 31 December 2023 was 5.8% driven by investment income given a generally higher yielding portfolio, and also a significant reduction in treasury yields and narrowing of credit spreads during the fourth quarter. For 2022 the portfolio returned (5.0)% mostly due to unrealised losses resulting from the significant increase in treasury yields.

Net investment income, excluding realised and unrealised gains and losses, was $41.3 million for the year ended 31 December 2023 (31 December 2022 - $17.8 million). Total investment return, including net investment income, net realised gains and losses, and net change in unrealised gains and losses, was a gain of $70.6 million (31 December 2022 - $52.8 million loss).

The breakdown of the managed investment portfolio is as follows:

Key investment portfolio statistics for our fixed maturities and managed cash were:

Capital & dividends

Total capital and tangible capital available was $0.99 billion as at 31 December 2023 (31 December 2022 - $0.87 billion).

Tangible net assets per share as at 31 December 2023 was $6.25, or £4.91 (31 December 2022 - $5.41 or £4.47).

CHL continued on-market purchases of its shares under a share purchase programme where shares may be repurchased pursuant to authority obtained at CHL's most recent annual general meeting. Shares purchased by CHL's employee benefit trust during 2023 amounted to $13.7 million (2022 - $19.9 million) and will be held in trust to meet future obligations under CHL's variable incentive schemes.

On 21 February 2024 CHL's Board of Directors declared a final dividend of US$0.18 (approximately 14 pence using the exchange rate on 20 February 2024) per common share, resulting in an aggregate payment of $29.7 million. The dividend will be paid in pounds sterling on 24 April 2024 to shareholders of record on 22 March 2024 (the "Record Date") using the pound sterling / US dollar spot exchange rate at 12 noon BST on the Record Date.

CHL previously declared and paid an interim dividend during 2023 of US$0.18 (approximately 14 pence) per common share. Consequently, the full 2023 dividend is $0.36 (approximately 28 pence) per common share in line with our stated dividend policy.

Financial Information

The unaudited consolidated financial statements for the year ended 31 December 2023 are published on Conduit's website at www.conduitreinsurance.com.

Conduit's 2023 Annual Report and Accounts are expected to be made available on Conduit's website by Friday 1 March 2024.

Presentation for Analysts and Investors at 12:00 noon UK time

Conduit Re's management will host a virtual meeting for analysts and investors via a webcast and conference call on Wednesday 21 February 2024 at 12:00 noon UK time / 8:00 am Bermuda time.

To access the webcast, please register in advance here:

https://www.lsegissuerservices.com/spark/ConduitHoldingsLtd/events/3f1128c7-aac9-4441-a8c5-c55ba69a4c4c

To access the conference call, please register to receive unique dial-in details here:

https://registrations.events/direct/LON665060

A recording of the conference call will be made available later in the day on the Investors section of Conduit Re's website at www.conduitreinsurance.com.

Retail Investor Presentation via Investor Meet Company at 3:00 pm UK time

Neil Eckert, Executive Chairman, will provide an additional live presentation relating to the Full Year 2023 Financial Results via the Investor Meet Company platform for retail investors on 21 February 2024 at 3:00pm UK time.

The presentation is open to all existing and potential shareholders. No new material, including trading or financial information, will be disclosed during the presentation.

There will be an opportunity for Questions & Answers at the end of the meeting. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9:00 am UK time the day before the meeting or at any time during the live presentation.

Investors can register to join the presentation via the below link:

https://www.investormeetcompany.com/conduit-holdings-limited/register-investor

Media contacts

H/Advisors Maitland - Vikki Kosmalska / Genevieve Ryan

+44 (0) 207 379 5151

conduitre@h-advisors.global

Investor relations and other enquiries:

info@conduitreinsurance.com

Panmure Gordon (UK) Limited (Joint Corporate Broker)

+44 (0) 207 886 2500

Berenberg (Joint Corporate Broker)

+44 (0) 203 207 7800

Peel Hunt (Joint Corporate Broker)

+44 (0) 207 418 8900

This announcement contains information, which may be of a price sensitive nature, that Conduit is making public in a manner consistent with the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended, and other regulatory obligations. The information was submitted for publication, through the agency of the contact persons set out above, at 7:00 am UK time on 21 February 2024.

About Conduit Re

Conduit Re is a pure-play Bermuda-based reinsurance business with global reach. Conduit Reinsurance Limited is licensed by the Bermuda Monetary Authority as a Class 4 insurer. A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of a- (Excellent) to Conduit Reinsurance Limited. The outlook assigned to these ratings is stable.

Conduit Holdings Limited is the ultimate parent of Conduit Reinsurance Limited and is listed on the London Stock Exchange (ticker: CRE). References to "Conduit" include Conduit Holdings Limited and all of its subsidiary companies.

Learn more about Conduit Re:

Website: https://conduitreinsurance.com/

LinkedIn: https://www.linkedin.com/company/conduit-re

Important information (disclaimers)

This announcement contains inside information for the purpose of the Market Abuse Regulation (EU) No 596/2014 (which forms part of UK domestic law pursuant to the European Union (Withdrawal) Act 2018, as amended).

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "goals", "objective", "rewards", "expectations", "signals", "projects", "anticipates", "expects", "achieve", "intends", "tends", "on track", "well placed", "continued", "estimated", "projected", "upcoming", "may", "will", "aims", "could" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, targets, future events or intentions. Forward-looking statements include statements relating to the following: (i) future capital requirements, capital expenditures, expenses, revenues, unearned premiums pricing rate changes, terms and conditions, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, claims development, losses and loss estimates and future business prospects; and (ii) business and management strategies and the expansion and growth of Conduit's operations.

Forward-looking statements may and often do differ materially from actual results. Forward-looking statements reflect Conduit's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Conduit's business, results of operations, financial position, liquidity, prospects, growth and strategies. These risks, uncertainties and assumptions include, but are not limited to: the possibility of greater frequency or severity of claims and loss activity than Conduit's underwriting, reserving or investment practices have anticipated; the reliability of catastrophe pricing, accumulation and estimated loss models; the actual development of losses and expenses impacting estimates for claims which arose as a result of recent loss activity such as the Ukraine crisis, Hurricanes Ian, Ida, and Idalia, the European storms and floods in 2021 and 2022 and, the earthquake in Turkey and wildfires in Canada and Europe; the impact of complex causation and coverage issues associated with attribution of losses to wind or flood damage; unusual loss frequency or losses that are not modelled; the effectiveness of Conduit's risk management and loss limitation methods, including to manage volatility; the recovery of losses and reinstatement premiums from our own reinsurance providers; the development of Conduit's technology platforms; a decline in Conduit's ratings with A.M. Best or other rating agencies; the impact that Conduit's future operating results, capital position and ratings may have on the execution of Conduit's business plan, capital management initiatives or dividends; Conduit's ability to implement successfully its business plan and strategy during 'soft' as well as 'hard' markets; the premium rates which are available at the time of renewals within Conduit's targeted business lines and at policy inception; the pattern and development of premiums as they are earned; increased competition on the basis of pricing, capacity or coverage terms and the related demand and supply dynamics as contracts come up for renewal; the successful recruitment, retention and motivation of Conduit's key management and the potential loss of key personnel; the credit environment for issuers of fixed maturity investments in Conduit's portfolio; the impact of the ongoing conflicts in Ukraine and the Middle East, the impact of swings in market interest rates, currency exchange rates and securities prices; changes by central banks regarding the level of interest rates and the timing and extent of any such changes; the impact of inflation or deflation in relevant economies in which Conduit operates; Conduit becoming subject to income taxes in Bermuda, the United States or in the United Kingdom; and changes in insurance or tax laws or regulations in jurisdictions where Conduit conducts business. Forward-looking statements contained in this trading update may be impacted by the escalation or expansion of the Ukraine conflict or Middle East conflict, the volatility in global financial markets and governmental, regulatory and judicial actions, including coverage issues.

Forward-looking statements speak only as of the date they are made. No representation or warranty is made that any forward-looking statement will come to pass. Conduit disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by law or regulation. All subsequent written and oral forward-looking statements attributable to Conduit and/or the group or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above.

"Estimated ultimate premiums written" is the estimated total gross premiums written (excluding reinstatement premiums) that is expected to be earned assuming all bound contracts run to the end of the period of cover, after management discount for prudence. "Estimated ultimate premiums written" reflects underwriter expectations at time of writing and involves significant judgement. Prior year comparative figures reflect those presented in Conduit's previously published Trading Update and are not intended to present a current view of underwriting year expectations for prior periods. We caution against using estimated ultimate premiums written for anything other than understanding how we view 1/1 on this basis in comparison to prior periods. This figure is not representative of revenue recorded in the IFRS financial statements.

The Conduit renewal year on year indicative risk adjusted rate change measure is an internal methodology that management uses to track trends in premium rates of a portfolio of reinsurance contracts. The change measure is specific for our portfolio and reflects management's assessment of relative changes in price, exposure and terms and conditions. It is also net of the estimated impact of claims inflation. It is not intended to be commentary on wider market conditions. The calculation involves a degree of judgement in relation to comparability of contracts and the assessment noted above, particularly in Conduit's initial years of underwriting. To enhance the methodology, management may revise the methodology and assumptions underlying the change measure, so the trends in premium rates reflected in the change measure may not be comparable over time. Consideration is only given to renewals of a comparable nature so it does not reflect every contract in the portfolio of Conduit contracts. The future profitability of the portfolio of contracts within the change measure is dependent upon many factors besides the trends in premium rates.

Additional Performance Measures (APMs)

Conduit presents certain APMs to evaluate, monitor and manage the business and to aid readers' understanding of Conduit's financial statements and methodologies used. These are common measures used across the (re) insurance industry and allow the reader of Conduit's financial reports to compare those with other companies in the (re)insurance industry. The APMs should be viewed as complementary to, rather than a substitute for, the figures prepared in accordance with IFRS. Conduit's Audit Committee has evaluated the use of these APMs and reviewed their overall presentation to ensure that they were not given undue prominence. This information has not been audited.

Management believes the APMs included in the consolidated financial statements are important for understanding Conduit's overall results of operations and may be helpful to investors and other interested parties who may benefit from having a consistent basis for comparison with other companies within the (re)insurance industry. However, these measures may not be comparable to similarly labelled measures used by companies inside or outside the (re)insurance industry. In addition, the information contained herein should not be viewed as superior to, or a substitute for, the measures determined in accordance with the accounting principles used by Conduit for its consolidated financial statements or in accordance with IFRS.

Below are explanations, and associated calculations, of the APMs presented by Conduit:

Consolidated statement of comprehensive income (loss) - unaudited

For the year ended 31 December 2023

Consolidated balance sheet - unaudited

As at 31 December 2023

Statement of consolidated cash flows - unaudited

For the year ended 31 December 2023