Conduit Holdings (CRE) is the parent company of Conduit Re, a Bermuda-based pure-play reinsurance company which launched in December 2020 when the holding company listed on the London Stock Exchange.

The firm writes reinsurance policies across property, casualty and specialty lines, always making sure its risk is neutral across different sectors and geographies based on an in-depth view of the underlying assets and the specific risk factors.

Having been established in 2020, the firm has no baggage in terms of ‘legacy’ policies which might come back to bite it, which is a big differentiating factor for investors who are used to buying financial stocks and insurers in particular.

It is this lack of ‘skeletons in the cupboard’, together with the expertise of the management team and the current ‘hard market’ in insurance which makes Conduit Re such an exciting prospect.

According to chief executive Trevor Carvey, it typically takes 18 months for written premiums to flow through to the bottom line, which means the firm is now seeing the benefit of business it took on mid-way through 2022.

To give some impression of how fast the company is growing, it wrote more than $900 million worth of premiums in the first nine months of this year, an increase of 56% on this time last year, and since inception it has written $2 billion with what is called ‘unearned premium’ of $676 million which is yet to flow through to profits.

This means in less than three years the firm has almost hit its five-year target already, Carvey tells Shares.

This is no flash in the pan, however, as the insurance market is going through one of its once-in-a-generation phases of sharply rising rates.

‘Trevor and his team have created a scalable business model and a platform that is delivering strong organic sustainable growth and we have an ample capital base that will enable us to continue to do so,’ says chairman Neil Eckert.

‘We expect the duration of the current hard cycle to be extended due to structural changes in the industry, continued inflationary pressures and adverse development on the industry’s legacy casualty business.’

Analysts at Berenberg agree, calling this a ‘generational opportunity’ across the London reinsurance market, with significant ‘upside risks’ to earnings forecasts in the absence of any major natural catastrophes. Conduit Re has avoided the worst impact of these as most of the risk so far has been carried by the insurers themselves.

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