Conduit LON: CRE reported comprehensive income of $80.3 million for the first half of 2026, compared with a comprehensive loss of $13.5 million a year earlier, as a more benign catastrophe environment helped drive a sharp improvement in underwriting results.
Chief Executive Officer Neil Eckert said the reinsurer generated a 7.8% return on equity under its amended methodology and increased tangible net assets per share by 8.4% in the first half and 23.2% over the past 12 months. Tangible net assets per share stood at £5.70 at June 30.
The company’s undiscounted combined ratio improved to 92.6% from 122.1% in the prior-year period. Gross premiums written declined 1.8% year-over-year to 789 million, reflecting Conduit’s decision to reduce business in areas where rates no longer met its return requirements while continuing to expand in casualty lines.
Portfolio shifts toward casualty and excess of loss
Management said market conditions became increasingly competitive during the first half, with risk-adjusted rates across the portfolio declining about 6%. Conduit has responded by prioritizing underwriting margins over premium volume, reducing certain quota-share treaties and repositioning property and specialty portfolios toward excess-of-loss business.
“We continue to grow in areas where we believe pricing remains attractive, particularly casualty, whilst reducing exposures in parts of property and specialty where rates no longer meet our return hurdles,” Eckert said.
Property gross premiums written fell 9% to 454.8 million. Chief Underwriting Officer Stephen Postlewhite said the reduction was expected and reflected the company’s withdrawal from quota-share participations with more marginal profitability, partly offset by selectively adding excess-of-loss business and international opportunities.
Property risk-adjusted pricing declined approximately 10% in the first half, while property catastrophe excess-of-loss rates were generally down 15% to 20% at midyear, Postlewhite said. The segment’s undiscounted combined ratio improved to 72.8% from 130.5% a year earlier, when results were affected by California wildfire losses.
Conduit aims to move toward a roughly 50/50 split between quota-share and excess-of-loss business in property over the next 12 to 18 months, management said during the question-and-answer session.
Casualty premiums increased 21% to $217 million, supported by deeper relationships with preferred clients and growth in general third-party liability. Risk-adjusted casualty pricing was down about 1%, which management characterized as relatively stable compared with other areas of the market. The casualty undiscounted combined ratio was 102.9%, broadly in line with the prior-year period.
Specialty premiums declined 5% to $117.2 million as Conduit reduced participation in classes facing more aggressive competition. Risk-adjusted specialty rates fell 7%, while the segment’s combined ratio was 104.8%, including losses associated with the Middle East conflict. Postlewhite said the company continues to see selected opportunities in aviation, political violence and terrorism, with aviation generating strong submission activity at midyear.
Retrocession expanded as competition rises
Conduit increased retrocessional protection during 2026, adding coverage for peak and secondary peril exposures, raising limits and lowering retentions in its core program. The company also retained cover for second- and third-event scenarios.
Postlewhite said the additional protection has reduced modeled net probable maximum losses at both one-in-100-year and one-in-250-year return periods. Although the changes raised ceded reinsurance costs, management said they should improve earnings stability and protect capital during the softening phase of the cycle and the Atlantic wind season.
Chief Financial Officer Elaine Whelan said ceded reinsurance expenses rose to 73.3 million in the first half from 53.4 million a year earlier as a result of the additional cover. The company reported an undiscounted net loss ratio of 80.7%, compared with 109.6% in the prior year, while its discounted combined ratio improved to 80.4% from 108.3%.
Investment income and capital returns support results
Conduit’s managed investment portfolio expanded by about $375 million over the past 12 months to $2.3 billion. Net investment income rose more than 20% year-over-year to $46.7 million, aided by the larger asset base and a current book yield of approximately 4.2%.
The overall investment return was 0.9%, however, compared with 3.9% a year earlier, as rising Treasury yields produced unrealized mark-to-market losses. Whelan said the portfolio remained short duration, with a duration of 2.7 years, and maintained an average credit quality of AA.
During the first half, Conduit repurchased 6.8 million shares for $38.9 million and paid $28.7 million in dividends. Eckert said the company returned about $68 million to shareholders through dividends and share repurchases.
Management said it expects gross premiums written for the full year to be modestly below 2025 levels as it takes a more conservative approach to premium estimates and continues to avoid business that does not meet underwriting hurdles. Reinsurance revenue is expected to be less affected because of the earning profile of prior underwriting years and the faster earning pattern of excess-of-loss business.
Looking ahead, Eckert said Conduit expects competition and price softening to persist across many lines. “Our ability to be nimble and focus on capital discipline and margin rather than market share will become increasingly important,” he said.
About Conduit (LON:CRE)
Conduit Re is a Bermuda-based multi-line 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.
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