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Investing.com - Barclays initiated coverage on Conduit Holdings Ltd (LON:CRE) with an Underweight rating and a price target of GBP2.80 on Thursday.
The investment bank cited concerns about Conduit’s recent disappointing results and questioned the company’s ability to achieve its mid-teens return on equity (ROE) target in the medium term.
Barclays noted that Conduit’s reliance on proportional reinsurance, which management is trying to change over the medium term, would likely make the company an unlikely acquisition target.
The bank expressed skepticism about Conduit’s underwriting progress, suggesting the reinsurer might struggle to gain access to the best business in an increasingly competitive environment. Barclays’ forecasted mid-to-high 80s combined ratio is 3-5 percentage points above Bloomberg consensus.
Barclays expects Conduit’s net income to decline from 2027, projecting that a softening combined ratio will likely not be offset by top-line growth, and does not model Conduit reaching the mid-teens ROE that management aims for over the mid-term.
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