Conduit Re can hold start-up growth mode into 2025 if market holds

Conduit Re still has fuel in the engine for continued growth at a start-up pace before the group eventually has to settle into a longer-term sustainable run-rate, top officials told their company’s fourth quarter earnings call. 

“While we don’t expect to always reproduce these levels of growth year on year, we are still in growth mode generally and we do expect to see a further uplift in 2024 and, subject to market conditions, again in 2025,” CEO Trevor Carvey (pictured right) said. 

The group’s initial capital stockpile remains sufficient for growth in what will be year four of an initial five-year growth plan. Conduit has “more than enough capital to support those goals and expectations”  and to “take advantage of market conditions,” he said. 

Conduit Re’s end-year Bermuda solvency capital ratio of 381% may be down notably from the start-up end-2021 reading of 574%, but remains well above the broad range of 200-300% that key peers sport. 

CFO Elaine Whelan  expects Conduit Re to eventually settle into a long-term target range “not dissimilar from the rest of our peer group” with “enough headroom to take advantage of any opportunity … without having too much capital.” 

And the runway to that target range need not follow the pattern seen to date as Conduit Re finally starts recycling profit into its growth capacity and has less “heavy lifting” to do from its now-advanced corporate build-out, Whelan added. 

Growth opportunities are snowballing as Conduit Re has room to expand its take on attractive existing deals, build new deals with existing clients, bring on new business in its target lines and even consider expanding its array of expertise over time, Carvey argued. “It is such an enormous universe that we are sitting in,” he said for analysts. 

“We see many, many hundreds of contracts,” Carvey said of market dynamics.  Where the Conduit Re hurdle rate is met, “we are able to increase our shares” for outright book growth. Elsewhere, Carvey sees lines where “we are still very keen to develop,” such as some very precise slices of the current specialty  market. 

Talk of continued start-up quality top-line growth comes just as Conduit Re started to show some maturity towards the bottom line. Conduit Re broke through to its first year of major profits, hauling in $190.8 million in comprehensive income, a 22.0% return on equity, on a major boost to underwriting margins. 

“It’s the year we expected to achieve scale and maturity,” Carvey said.

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