Bermudian-based Conduit Holdings Ltd, the parent company of new Class 4 reinsurer Conduit Re, has reported a loss after tax of $4.6 million for the period ending December 31.

Conduit Re is part of the “class of 2020” group of companies that have been set up in Bermuda to capitalise on rising re/insurance rates.

The company’s consolidated financial statements for the period from incorporation to December 31 include mostly the expenses from Conduit’s initial public offering on the London Stock Exchange as well as operating expenses from the first month of setting up business, the company’s chief financial officer, Elaine Whelan, said.

The net proceeds of the IPO were $1.057 billion, the company reported.

Conduit said it had a basic and diluted loss per share of three cents.

It reported book value per share of $6.37, and negative return on equity of 0.4 per cent.

The company began underwriting on January 1.

Neil Eckert, executive chairman, said: “Conduit Re has got off to a flying start. We have launched the business in attractive and improving market conditions. We have already established a top class management and underwriting team.

“We are embracing the benefits that technology brings for the new generation of reinsurance underwriters and we have established strong relationships with our key trading partners around the market.

“It is an exciting time to be building a new reinsurance business and we couldn’t have asked for a better beginning to the establishment of Conduit as a new breed of reinsurer.

“In addition, we are working hard on our ESG strategy and we are delighted to announce that Sir Nicholas Soames has agreed to chair the newly established Conduit Foundation, which will engage in both social and environmental projects.”

Trevor Carvey, chief executive and chief underwriting officer, said: “Following on from our strong start in the 1 January 2021 renewals, we continue to build out our underwriting portfolio according to plan.

“We have seen wide acceptance by brokers and clients alike as an attractive and value-adding business partner and we are well positioned to deliver on our stated strategy of building a balanced and diversified portfolio.”

He added: “We are the beneficiaries of attractive and improving market conditions in the classes of business we are targeting, which allows us to remain highly selective in the way we deploy our capital, a hallmark of the Conduit Re underwriting philosophy.

“The underlying pressures driving improvements in both rates and terms are coming from the primary markets and permeating at an increasing rate into the reinsurance markets. We believe this will lead to a more sustained improvement taking into account the many factors that led to deteriorations in industry loss ratios in recent years.

“Consequently, we have been more focused initially on taking a pro-rata share of primary insurance via the underwriting of quota share reinsurance treaties rather than on excess of loss in our early trading.

“However, we still expect to deliver a balanced portfolio across all classes and territories and we look forward to the upcoming April and mid-year renewals with optimism.”

Ms Whelan said costs directly related to the equity issuance were charged against equity, and the loss after tax was driven primarily by payroll, legal and regulatory expenses.

She added: “While it will take some time for us to fully build out our underwriting book, and therefore fully deploy our capital, we are focused on risk selection and will maintain a balanced approach. Conduit is an underwriting business, first and foremost, and that is rightly where our principal focus is. Capital preservation and liquidity will, therefore, remain the primary objective of our investment strategy in order to support our underwriting goals.”

Conduit Re is headquartered in Hamilton, and also has an office in London.

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