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Investing.com -- Conduit Holdings Ltd (LON:CRE) on Wednesday reduced its full-year 2025 return on equity (ROE) guidance from approximately 10% to mid-single-digits, primarily due to the UK High Court judgment on the 2022 Ukraine loss.
The downgrade comes at a time when larger industry peers are pre-releasing second-quarter earnings that reflect unusually low natural catastrophe losses, making Conduit’s announcement particularly disappointing for investors.
In response to these challenges, management plans to reposition the business by enhancing outwards reinsurance, rationalizing the quota share book, and hiring new underwriters to bring fresh perspective.
The company’s second-quarter financial results fell short of expectations across several metrics. Gross written premiums missed by 2.2%, with Specialty business underperforming by 13.6%. Property and Casualty segments performed better, beating expectations by 1.0% and 1.6% respectively.
Conduit’s reinsurance service result came in at -$15.4 million, significantly below consensus estimates of $27.9 million. The company reported earnings per share of -$0.09, well below the $0.08 expected by Jefferies analysts.
The discounted combined ratio missed by 11.1 percentage points, primarily driven by an 11.6 percentage point miss in the discounted net loss ratio. Similarly, the undiscounted combined ratio missed by 13.5 percentage points.
On a positive note, net investment income exceeded expectations by 4.8%, while the net investment result beat forecasts by 47.1%. Dividend per share was in line with analyst expectations.
Conduit Holdings currently trades at 384.00 pence per share, with Jefferies analysts maintaining a Buy rating and a price target of 585.00 pence, suggesting a potential upside of 52%.
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