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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:USD" } }, "f48716": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:PurchaseOfIntangibleAssetsClassifiedAsInvestingActivities", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:USD" } }, "f48720": { "value": "300000", "decimals": -5, "dimensions": { "concept": "ifrs-full:PurchaseOfIntangibleAssetsClassifiedAsInvestingActivities", "entity": "scheme:21380085AE62D1BXSF19", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:USD" } }, "f48739": { "value": "-148700000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInInvestingActivities", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:USD" } }, "f48743": { "value": "-77900000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInInvestingActivities", "entity": "scheme:21380085AE62D1BXSF19", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:USD" } }, "f48863": { "value": "2023-12-31", "dimensions": { "concept": "ifrs-full:DateOfEndOfReportingPeriod2013", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48867": { "value": "1.General informationCHL was incorporated under the laws of Bermuda on 6 October 2020 and, on 7 December 2020,all of its common shares of par value $0.01 per share were admitted to the standard listingsegment of the Official List of the UK Financial Conduct Authority and admitted to trading on theLSE\u2019s main market for listed securities. CHL\u2019s registered office is Clarendon House, 2 ChurchStreet, Hamilton HM 11, Bermuda. CHL's consolidated financial statements as at, and for the yearended 31 December 2023 include the Company's subsidiaries. The principal activity of Conduitis to provide reinsurance products and services to its clients worldwide.A full listing of Conduit's related parties can be found in note 21.2.Summary of material accounting policiesThe basis of preparation, use of judgements and estimates, consolidation principles and materialaccounting policies adopted in the preparation of these consolidated financial statements are setout below. Excluding percentages, share and per share data or where otherwise stated, allamounts in tables and narrative disclosures are in millions of US dollars.Basis of preparationThese consolidated financial statements are prepared on a going concern basis in accordancewith IFRS as issued by the IASB, and the DTR issued by the Financial Conduct Authority, and areprepared on a historical cost basis, except for items measured at fair value as disclosed in therelevant accounting policies. In accordance with the requirements of IAS 1, the financialstatements\u2019 assets and liabilities have been presented in order of liquidity, which providesinformation that is more reliable and relevant for a financial institution.In the course of preparing these consolidated financial statements, no judgements have beenmade in the process of applying Conduit\u2019s accounting policies, other than those involvingestimations as noted in the \u2018Use of judgements and estimates\u2019 section, that have had a significanteffect on amounts recognised in these consolidated financial statements.Going concernThe consolidated financial statements of Conduit have been prepared on a going concern basis.In assessing Conduit's going concern position as at 31 December 2023, the Board haveconsidered a number of factors, including the current balance sheet position and Conduit\u2019sstrategic and financial plan, taking account of possible changes in trading performance andfunding retention, stress testing and scenario analysis. Conduit\u2019s capital ratios and its capitalresources are comfortably in excess of regulatory solvency requirements, and internal stresstesting indicates Conduit can withstand severe economic and competitive stresses.As a result of the assessment, the Board have a reasonable expectation that CHL and CRL haveadequate resources to continue in operational existence for the foreseeable future and thereforebelieve that Conduit is well placed to manage its business risks successfully. Accordingly, theycontinue to adopt the going concern basis in preparing the consolidated financial statements.Changes in accounting policies and new standardsAs previously disclosed, Conduit has initially applied IFRS 17 and IFRS 9, including anyconsequential amendments to other standards, from 1 January 2023. There are no other newor amended IFRS reporting standards, that have a material effect, that have become effectiveduring the year. IFRS 17 has had a significant impact on accounting for reinsurance contracts.As a result, Conduit has restated certain comparative amounts and presented an additionalconsolidated balance sheet as at 1 January 2022. Conduit\u2019s updated accounting policies forreinsurance contracts and financial instruments are set out below. Disclosures relating to thetransition to IFRS 17 and IFRS 9 have been set out in note 22.Future accounting changesOf the upcoming accounting standard changes, we do not anticipate that any will have a materialimpact on the financial statements\u2019 results, or presentation and disclosures.Use of judgements and estimatesThe preparation of financial statements in conformity with IFRS requires Conduit to makejudgements and estimates that affect the reported and disclosed amounts at the balance sheetdate, revenues and expenses during the reporting period and the associated financial statementdisclosures. All estimates are based on management\u2019s knowledge of current facts andcircumstances, assumptions based on that knowledge and their prediction of future events.Actual results may differ significantly from the estimates made.The most significant estimates made by management are in relation to the liability for incurredclaims and associated ceded reinsurance recoveries, as discussed in note 3 and note 14.Less significant estimates are made in determining the estimated fair value of certain financialinstruments, as discussed in note 3 and note 12.In addition, some management judgement is exercised in determining the total premiumcashflows expected to be received from reinsurance contracts that are used to determine theamount of reinsurance revenue recognised in the period.While not significant, estimates are also used in the estimated fair value of the MIP as discussedin note 7.Consolidation principlesThese consolidated financial statements comprise the financial statements of CHL and itssubsidiaries as at and for the year ended 31 December 2023. Subsidiaries are those entities thatare controlled by Conduit and are fully consolidated from the date on which Conduit obtainscontrol and continue to be consolidated until the date when such control ceases. Control isachieved when Conduit is exposed, or has rights, to variable returns from its involvement withthe subsidiary and has the ability to affect those returns through its power over the subsidiary.Intragroup balances and transactions are eliminated in preparing the consolidated financialstatements. Subsidiaries\u2019 accounting policies are generally consistent with Conduit\u2019saccounting policies.Foreign currencyThe functional currency, which is the currency of the primary economic environment in whichConduit operates, is US dollars. Items included in the financial statements of each entity aremeasured using the functional currency. These consolidated financial statements are presentedin US dollars.Foreign currency transactions are recorded in the functional currency for each entity using theexchange rates prevailing at the dates of the transactions. Monetary assets and liabilitiesdenominated in foreign currencies are revalued at period end exchange rates. The resultingforeign exchange differences on revaluation are recorded in the consolidated statement ofcomprehensive income (loss) within net foreign exchange gains (losses). Non-monetary assetsand liabilities denominated in a foreign currency are carried at historic rates. Non-monetaryassets and liabilities carried at estimated fair value and denominated in a foreign currency aretranslated at the exchange rate at the date the fair value was determined.Reinsurance contractsPrior to IFRS 17 coming into effect, IFRS was silent in respect of certain aspects relating to themeasurement of reinsurance contracts. In such instances, the IFRS framework allows referenceto another comprehensive body of accounting principles. Conduit\u2019s management thereforedetermined appropriate measurement bases, to provide the most useful information to usersof the financial statements, using their judgement and considering US GAAP.IFRS 17 sets out the classification, measurement and presentation and disclosure requirements forreinsurance contracts. It requires reinsurance contracts to be measured using current estimatesand assumptions that reflect the timing of cash flows and recognition of profits as insuranceservices are delivered. The standard provides two main measurement models which are theGeneral Measurement Model (GMM) and the Premium Allocation Approach (PAA).The PAA simplifies the measurement of reinsurance contracts for remaining coverage, or pre-claims, in comparison to the GMM. The PAA is similar to Conduit\u2019s previous accounting policiesunder IFRS 4 for calculating revenue, however there are some key presentation changes withrespect to certain commissions. The GMM is used for the measurement of the liability forincurred claims.PAA eligibilityUnder IFRS 17, Conduit\u2019s reinsurance contracts issued and ceded reinsurance contracts heldare all eligible to be measured by applying the PAA, due to meeting the following criteria:\u2014Loss-occurring reinsurance contracts with coverage period of one year or less areautomatically eligible; and\u2014Modelling of risk-attaching contracts or contracts with a coverage period greater than oneyear produces a measurement for the group of reinsurance contracts that does not differmaterially from that which would be produced applying the GMM.ClassificationContracts that transfer significant reinsurance risk at the inception of the contract are accountedfor as reinsurance contracts. Contracts purchased and held by Conduit under which it transferssignificant reinsurance risk to a counterparty are accounted for as ceded reinsurance contracts.Contracts that do not transfer significant reinsurance risk are accounted for as investmentcontracts. Reinsurance risk is transferred when a reinsurer agrees to compensate a policyholderif a specified uncertain future event adversely affects the policyholder.Conduit\u2019s accounting policies apply to both reinsurance contracts issued and ceded reinsurancecontracts held unless explicitly referenced as applying to contracts issued or ceded only. Conduitwrites both excess of loss and proportional (also known as quota share or pro-rata) reinsurancecontracts. The type of contract impacts the recognition of reinsurance revenue. Contract typesare discussed on page 106.Separating components from reinsurance contractsIFRS 17 distinguishes three components that, if embedded in a reinsurance contract, should bebifurcated, and accounted for separately. These are:\u2014Cash flows relating to embedded derivatives that are required to be separated;\u2014Cash flows relating to distinct investment components; and\u2014Promises to transfer distinct goods or distinct non-insurance services.IFRS 17 then applies to all remaining components of the contract. Conduit does not have anycontracts containing non-insurance components that require separation. Where contracts containmultiple reinsurance components that meet the requirements for separation, these are separatedand accounted for as standalone contracts.Some reinsurance contracts issued contain profit sharing arrangements, such as profitcommissions and no claims bonuses. Under these arrangements, there is a minimum guaranteedamount that the policyholder will always receive either in the form of profit commission, or asreimbursement for claims, or another contractual payment, irrespective of the insured eventhappening. These are typically considered non-distinct investment components. Non-distinctinvestment components are not separated from the reinsurance contract as they are closelyinterrelated to the measurement of the reinsurance contract. However, the impact of the non-distinct investment components are excluded from the consolidated statement of comprehensiveincome (loss) by adjusting reinsurance revenue and reinsurance service expenses by theminimum amount due. There is no impact to the reinsurance service result as there is an equalreduction to both revenue and expenses.Level of aggregationConduit manages reinsurance contracts issued by class of business within an operating segment.Classes of business are aggregated into portfolios of contracts that are subject to similar risks.Contracts within each portfolio are grouped into groups of contracts that are issued within acalendar year, the annual cohort, and are (i) contracts that are onerous at initial recognition; (ii)contracts that at initial recognition have no significant possibility of subsequently becomingonerous; or (iii) a group of remaining contracts. These groups represent the level of aggregationat which reinsurance contracts are initially recognised and measured. Such groups are notsubsequently reconsidered.Onerous contractsUnder the PAA, it is assumed there are no contracts in the portfolio that are onerous at initialrecognition, unless there are facts and circumstances that may indicate otherwise. Managementprimarily considers the following to determine whether there are facts and circumstances thatmean a group of contracts are onerous:\u2014Pricing information;\u2014Results of similar contracts it has recognised; and\u2014External factors, such as a change in market experience or regulations.If a group of contracts becomes onerous, Conduit increases the carrying amount of the liabilityfor remaining coverage to the amount of the fulfilment cash flows with the amount of such anincrease recognised immediately in reinsurance service expenses. Subsequently, Conduitamortises the amount of the loss component by decreasing reinsurance service expenses. Theloss component amortisation is based on the passage of time over the remaining coverageperiod of contracts within an onerous group. If facts and circumstances indicate that theexpected profitability of the onerous group during the remaining coverage has changed, thenConduit remeasures the loss component by reassessing the fulfilment cash flows as required untilthe loss component is reduced to zero.Where a loss component is expected to be partially or fully recovered by ceded reinsurancecontracts, the amount of recovery is recognised in ceded reinsurance recoveries.RecognitionConduit recognises groups of reinsurance contracts it issues from the earliest of:\u2014The beginning of the coverage period of the group of contracts;\u2014The date when the first payment from the cedant is due or when the first payment is receivedif there is no due date; or\u2014For a group of onerous contracts, the date when facts and circumstances indicate that thegroup is onerous.For ceded reinsurance contracts Conduit recognises the group of contracts:\u2014If the reinsurance contracts provide proportionate coverage, at the later of the beginning ofthe coverage period of the group, or the initial recognition of the underlying coveredreinsurance contracts issued; or\u2014For non-proportionate coverage, the beginning of the coverage period of the group ofcontracts, unless an onerous group of underlying reinsurance contracts have been recognisedand the ceded reinsurance contract has been signed before that date.Modification and derecognitionConduit derecognises reinsurance contracts when:\u2014The rights and obligations relating to the contract are extinguished (meaning discharged,cancelled or expired); or\u2014The contract is modified such that the modification results in a change in the measurementmodel or the applicable standard for measuring a component of the contract, substantiallychanges the contract boundary, or requires the modified contract to be included in a differentgroup. In such cases, Conduit derecognises the initial contract and recognises the modifiedcontract as a new contract. When a modification is not treated as a derecognition, Conduitrecognises amounts paid or received for the modification with the contract as an adjustmentto the relevant liability for remaining coverage.Contract boundariesThe measurement of a group of reinsurance contracts includes all future cash flows expected toarise within the boundary of each contract in the group. Cash flows are within the boundary of areinsurance contract if they arise from substantive rights and obligations that exist during thereporting period in which Conduit can compel the cedant to pay the premiums, or in whichConduit has a substantive obligation to provide the cedant with services. A substantive obligationto provide services ends when Conduit has the practical ability to reassess the risks of the cedantand, as a result, can set a price of level of benefits that fully reflects those risks. Where Conduitissues multi-year contracts and does not have the ability to re-price on each policy anniversarythe contract is considered one contract and therefore future cash flows from each of the annualperiods are considered on initial recognition.For ceded reinsurance contracts the cash flows are within the boundary of the contract ifConduit has a substantive right to receive services or if Conduit is compelled to pay premiumsto the reinsurer. The substantive right to receive services from the reinsurer ends when:\u2014The reinsurer has the practical ability to reassess the risks transferred to it and can set a priceof level of benefits that fully reflects those risks; or\u2014The reinsurer has a substantive right to terminate the coverage.Conduit assesses the contract boundary at initial recognition and at each subsequent reportingdate to include the effects of changes in circumstances on Conduit\u2019s substantive rights andobligations. The assessment of the contract boundary, which defines the future cash flows thatare included in the measurement of the contract, requires judgement and consideration ofConduit's substantive rights and obligations. Conduit issues risk-attaching reinsurance contractswhich provide reinsurance coverage to underlying contracts issued within the terms of thecontract. While the contracts can have an annual term the contract boundary is assessed withconsideration of the coverage period of the underlying contracts. Contracts that cover claimsfrom underlying contracts within the contract period, loss-occurring contracts, are typicallyannual term. Where contracts contain multi-year terms, Conduit exercises judgement on whetherprovisions within the contract allow cancellation or re-pricing at each anniversary of the contract.Measurement \u2013 Liability for remaining coverageOn initial recognition of each group of contracts, the carrying amount of the liability for remainingcoverage is measured as the premiums received on initial recognition, if any, minus anyreinsurance acquisition expense cash flows allocated to the group of contracts and any amountsarising from the derecognition of the prepaid reinsurance acquisition expense cash flows asset.Conduit has chosen not to expense reinsurance acquisition expense cash flows on contracts withcoverage of one year or less when they are incurred in order to apply a consistent treatment ofreinsurance acquisition expense cash flows for all contracts, regardless of the length of coverage.Subsequently, at the end of each reporting period, the liability for remaining coverage is:\u2014Increased by any premiums received in the period;\u2014Decreased for reinsurance acquisition expense cash flows paid in the period;\u2014Decreased for the amounts of expected premium cash flows recognised as reinsurancerevenue for the services provided in the period;\u2014Increased for the amortisation of reinsurance acquisition expense cash flows in the periodrecognised as reinsurance service expenses; and\u2014Decreased for any non-distinct investment component paid or transferred to the liabilityfor incurred claims.Conduit has elected not to adjust the liability for remaining coverage for the time value of moneyas its reinsurance contracts do not contain a significant financing component.Conduit measures the reinsurance asset for remaining coverage for its ceded reinsurancecontracts that it holds on the same basis as reinsurance contracts issued, adapted to reflect thefeatures that differ between contracts issued versus contracts held.Reinsurance revenue recognised in the period is based on the total premium cash flows expectedto be received over the lifetime of the contract, net of any deductions that are paid to the cedant.The amount of total expected revenue from a contract recognised in the period is dependent onthe type of reinsurance contract, as discussed below.Excess of loss contractsFor the majority of excess of loss contracts, expected premium cash flows are assessed based onthe minimum and deposit or flat premium, as defined in the contract. Subsequent adjustments tothe minimum and deposit premium are assessed in the period in which they are determined. Forexcess of loss contracts where no deposit is specified in the contract, premium cash flows areassessed based on estimates of premiums provided by the ceding company. Subsequentadjustments, based on reports of actual premium by ceding companies, or revisions in estimates,are assessed in the period in which they are determined. For multi-year policies that are payablein annual instalments, where the reinsured has the sole ability to cancel, the total expectedpremium cash flows for all annual periods are assessed at the inception of the contract. Whereunilateral cancellation by the reinsurer exists at each anniversary of the contract the annualperiods are assessed as separate contracts.Reinsurance revenue for excess of loss contracts is generally recognised evenly over the termof the underlying risk period of the reinsurance contract, except where the period of risk differssignificantly from the contract period. In these circumstances, reinsurance revenue is recognisedover the period of risk in proportion to the amount of reinsurance protection provided. Wherecontract terms require the reinstatement of coverage after a ceding company\u2019s loss, as thereinstatement is contingent on the loss, the estimated mandatory reinstatement premiums arerecorded within reinsurance service expenses.Proportional contractsPremium cash flows for proportional contracts are assessed based on estimates of ultimatepremiums provided by the ceding company, supplemented by management's estimates ofpremiums based on its experience with the ceding company, familiarity with each market, the timingof the reported information and its understanding of the characteristics of each class of business.Initial estimates of premium cash flows are assessed in the period in which the contract incepts, orthe period in which the contract is bound, if later. Contracts written on a \u2018risks-attaching\u2019 basis coverclaims which attach to the underlying reinsurance policy written during the term of the respectivepolicy. Reinsurance revenue on such policies generally extend beyond the original term of thecontract. Subsequent adjustments, based on reports of actual premium by the ceding company,or revisions in estimates, are assessed in the period in which they are determined.Reinsurance acquisition expense cash flowsReinsurance acquisition expense cash flows represent the cash flows that arise from the costof selling and underwriting a group of reinsurance contracts and include:\u2014Contract specific costs, such as brokerage;\u2014Operating expenses that are incurred in relation to the fulfilment of reinsurance contracts; and\u2014An allocation of fixed and variable overheads.Reinsurance acquisition expenses are deferred over the period in which the related premiums areearned to the extent they are recoverable out of expected future revenue margins andrecognised within reinsurance service expenses.Commissions that are paid to cedants, such as ceding commissions, are not treated asreinsurance acquisition expense cash flows as they do not relate to a service. Such commissionsare treated as a reduction in the expected premium recognised as reinsurance revenue.Ceded reinsurance expensesCeded reinsurance is purchased in the normal course of business to increase capital capacity orto limit the impact of individual risk losses and loss events impacting multiple cedants, such asnatural-catastrophes, or both. Conduit may purchase ceded reinsurance on both an excess of lossand a proportional basis, and may supplement this with the use of ceded reinsurance cover linkedto the issuance of catastrophe bonds or other capital market products. Ceded reinsurancepremiums are recognised as ceded reinsurance expenses in the same manner as reinsurancecontracts issued, depending on the terms of the contract. Ceding commissions received arededucted from the premium paid that is recognised in ceded reinsurance expenses. Otherexpenses incurred in the placing of ceded reinsurance contracts that are in relation to a serviceby a third party, such as brokerage, are recognised in ceded reinsurance expenses.Measurement \u2013 Liability for incurred claimsThe liability for incurred claims represents the estimated ultimate cost of settling all reinsuranceclaims arising from events that have occurred up to the end of the reporting period, including theoperating costs that are expected to be incurred in the course of settling such claims,reinstatement premiums on specific loss events, profit commissions and similar expenses that arecontingent on claims plus a provision for IBNR. The liability for incurred claims is derived from theestimated fulfilment cash flows relating to expected claims. The fulfilment cash flows incorporate,in an unbiased way, all reasonable and supportable information available, without undue cost oreffort, about the amount, timing and uncertainty of those future cash flows. They also include anexplicit adjustment for non-financial risk, the risk adjustment. Estimates of future cash flows forincurred claims are discounted on initial recognition and then re-measured to current rates as atthe reporting date.Cash flows for outstanding losses are estimated initially on the basis of reported losses receivedfrom cedants. Cash flows for ACRs are determined where management\u2019s expectation of theultimate cost of the reported loss is greater than that reported. Estimated cash flows for IBNRmay also consist of a provision for additional development in excess of losses reported bycedants, as well as a provision for losses which have occurred but have not yet been reportedby cedants.Cash flows for IBNR are estimated initially using expected loss and loss adjustment expenseratios which are selected based on information derived by underwriters and actuaries during theinitial pricing of the business. These estimates are reviewed regularly and, as experience developsand new information is received, the cash flows are adjusted as necessary. As actual lossinformation is reported, and Conduit develops its own loss experience, management will usevarious actuarial methods as well as a combination of management\u2019s judgement and experience,historical reinsurance industry loss experience and estimates of pricing adequacy trends toestimate cash flows for IBNR.The estimation of the liability for incurred claims is a complex process which incorporates asignificant amount of judgement. It is reasonably possible that uncertainties in the reservingprocess, delays in cedants reporting losses to Conduit, together with the potential for unforeseenadverse developments, could lead to a material change in the liability for incurred claims.Any amounts recoverable from reinsurers are estimated using the same methodology as for theunderlying losses except for the requirement under IFRS 17 to assess the ceded reinsurancerecovery cash flows for the effect of any risk of non-performance, including expected creditlosses. Management monitors the creditworthiness of its reinsurers on an ongoing basis andassesses any reinsurance assets for the risk of non-performance, with a provision for non-performance risk being recognised as an expense in the period in which it is determined.Presentation of reinsurance contractsReinsurance assets and liabilitiesThe asset or liability for a portfolio of reinsurance contracts is the net position of both the liabilityfor remaining coverage and the liability for incurred claims. Whether a portfolio is in a liability orasset position is typically impacted by the timing of cash flows received versus cash flows paid.Conduit presents separately in the consolidated balance sheet portfolios of reinsurance contractsissued and held that are in an asset position and those that are in a liability position.All reinsurance contract assets and liabilities are deemed monetary assets and liabilities and arerevalued at period end exchange rates.Reinsurance revenueReinsurance revenue in the consolidated statement of comprehensive income (loss) is theamount of expected premium cash flows, net of any deductions paid to the cedant and excludingany non-distinct investment component. Conduit allocates the expected premium receipts toeach period of coverage on the basis of passage of time or the expected risk pattern if it differssignificantly from the passage of time.Reinsurance service expensesReinsurance service expenses in the consolidated statement of comprehensive income (loss)includes changes in the liability for incurred claims that do not arise from the application ofdiscount rates, being recognition and amortisation of any loss components, amortisation ofreinsurance acquisition expense cash flows and other attributable operating expenses.Ceded reinsurance income and expensesConduit has elected to present the income and expenses from ceded reinsurance contractsseparately in the consolidated statement of comprehensive income (loss). Ceded reinsuranceexpenses represent the total expected ceded premiums and other amounts, that are notcontingent on recoveries, payable to the reinsurer. Conduit recognises ceded reinsuranceexpenses based on the passage of time over the coverage period of a group of contracts orexpected risk pattern. Income from ceded reinsurance contracts includes expected recoverieson incurred claims, changes in expected recoveries related to past service, the provision for theeffects of changes in risk of reinsurer non-performance plus other amounts that are contingenton recoveries, such as ceded profit commissions payable to the reinsured.Net reinsurance finance income (expense)Reinsurance finance income (expense) includes the changes in the carrying amounts ofreinsurance and ceded reinsurance assets and liabilities arising from the unwind of discountrecognised in prior periods and the effects of remeasuring to current discount rates plus otherfinancial assumptions. Conduit has elected to disaggregate the changes in the risk adjustmentfor the time value of money and present in net reinsurance finance income (expense).Conduit has chosen not to disaggregate finance income (expense) between other comprehensiveincome (OCI) and comprehensive income.Financial instrumentsCash and cash equivalentsCash and cash equivalents include cash in hand, deposits held on call with banks, money marketfunds, and other short-term highly liquid investments with a maturity of three months or less atthe date of purchase. Carrying amounts approximate fair value due to the short-term nature andhigh liquidity of the instruments.InvestmentsConduit\u2019s fixed maturity securities portfolio meets the requirements for mandatory classificationas FVTPL and is carried at estimated fair value in the consolidated balance sheet. Theclassification of financial assets is determined at the time of initial purchase. A financial asset isclassified at FVTPL if it is held within a business model that is managed and evaluated on a fairvalue basis or if acquired principally for the purpose of selling in the short term, or if it forms partof a portfolio of financial assets in which there is evidence of short-term profit taking.Presentation of these securities in the FVTPL category is consistent with how managementmonitors and evaluates the performance of these securities on a fair value basis.Regular way purchases and sales of investments are recognised at estimated fair value on thetrade date, and are subsequently carried at estimated fair value. Balances pending settlement arereflected in the consolidated balance sheet in other assets or other payables. The estimated fairvalue of Conduit\u2019s fixed maturity securities portfolio is determined based on bid prices fromrecognised exchanges, broker-dealers, recognised indices or pricing vendors. Changes inestimated fair value of investments classified as FVTPL are recognised in the consolidatedstatement of comprehensive income (loss) within net unrealised gains (losses) on investments.Investments are derecognised when Conduit has transferred substantially all the risks andrewards of ownership. On derecognition of an investment held at FVTPL, previously recordedunrealised gains and losses are recycled from net unrealised gains (losses) on investments to netrealised gains (losses) on investments.Interest income, amortisation and accretion of premiums and discounts on fixed maturitysecurities are calculated using the effective interest rate method and recognised in netinvestment income. The carrying value of accrued interest income approximates estimated fairvalue due to its short-term nature and high liquidity.LeasesConduit recognises a right-of-use asset and a lease liability at the lease commencement date.The right-of-use asset is initially measured at cost, which comprises the initial measurement ofthe corresponding lease liability adjusted for any lease payments made at or before thecommencement date, plus any initial direct costs incurred and an estimate of any costs to beincurred at the expiration of the lease agreement.Right-of-use assets are subsequently measured at cost less accumulated depreciation and anyimpairment losses. Straight-line depreciation is calculated from the commencement date of thelease to the earlier of either the end date of the lease term or the useful life of the underlying asset.The lease liability is initially measured at the present value of the future lease payments at thelease commencement date. Lease payments are discounted using the interest rate implicit in thelease or, if that rate cannot be readily determined, Conduit's incremental borrowing rate. Leasepayments included in the measurement of the lease liability include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments thatdepend on an index or a rate, and amounts expected to be paid under residual value guarantees.The lease liability is subsequently measured by increasing the lease carrying amount to reflect theinterest due on the lease liability using the effective interest rate method and reducing thecarrying amount to reflect the lease payments made. Conduit re-measures the lease liability andthe related right-of-use asset whenever there is a change in future lease payments arising froma change in index or rate, if Conduit changes its assessment of whether it will exercise a purchase,extension or termination option or if there is a revised in-substance fixed lease payment.Right-of-use assets and lease liabilities are presented as separate financial statement line items inthe consolidated balance sheet.Employee benefitsEquity-based incentivesConduit currently operates a MIP under which shares are subscribed for or nil cost options aregranted. The fair value of the instruments granted is estimated on the date of grant. Theestimated fair value is recognised as an expense pro-rata over the vesting period of theinstrument, adjusted for the impact of any non-market vesting conditions. No adjustment tovesting assumptions is made in respect of market vesting conditions.Conduit also previously established a DSBP. A percentage of each employee's bonus isautomatically deferred into shares as nil cost options. These nil cost awards vest annually inseparate equal tranches over a three-year period from the date of grant and do not haveassociated performance criteria attached to the awards. These awards accrue dividendequivalents for all dividends declared where the record date falls between the grant date anddate of exercise, and are paid at the time of exercise.During 2023 Conduit established an LTIP. These nil cost awards granted to staff vest over a three-year period from the date of grant and do not have associated performance criteria attached tothe awards. These awards accrue dividend equivalents for all dividends declared where the recorddate falls between the grant date and date of exercise, and are paid at the time of exercise.At each balance sheet date, Conduit revises its estimate of the number of instruments that areexpected to become exercisable. It recognises the impact of the revision of original estimates, ifany, as equity-based incentive expense in the consolidated statement of comprehensive income(loss), and a corresponding adjustment is made to other reserves in shareholders\u2019 equity over theremaining vesting period.On exercise, the differences between the expense charged to the consolidated statement ofcomprehensive income (loss) and the actual cost to Conduit, if any, is transferred to otherreserves in shareholders\u2019 equity.PensionsConduit\u2019s pension plans are based on defined contributions or equivalent cash in lieu, subject toapplicable law and local market standards. On payment of contributions to the plans or cash inlieu there is no further obligation to Conduit. Contributions or payments of cash in lieu arerecognised as employee benefits in the consolidated statement of comprehensive income (loss)in the period when the services are rendered.TaxIncome tax on the profit or loss for the period comprises current and deferred tax. Current taxis the expected tax payable on the taxable income for the year using tax rates enacted orsubstantively enacted at the year-end reporting date and any adjustments to tax payable inrespect of prior periods.Deferred tax is provided, using the liability method, on temporary differences arising between thetax bases of assets and liabilities and their carrying amounts in the financial statements. Theamount of deferred tax provided is based on the expected manner of realisation or settlement ofthe carrying amount of the assets and liabilities, using tax rates enacted or substantively enactedat the reporting date. Deferred tax assets are recognised in the consolidated balance sheet to theextent that it is probable that future taxable profit will be available against which the temporarydifferences can be utilised.Own sharesOwn shares include shares repurchased under share repurchase authorisations and held intreasury, plus shares purchased and held in trust, for the purposes of employee equity-basedincentive schemes. Own shares are deducted from shareholders\u2019 equity. No gain or loss isrecognised on the purchase, sale, cancellation or issue of own shares and any consideration paidor received is recognised directly in equity.Share capital and issuance costsShares are classified as shareholders' equity if there is no obligation to transfer cash or otherfinancial assets. Transaction costs that are attributable to the issuance of new shares are treatedas a deduction from equity.", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48868": { "value": "
1.
General information
CHL was incorporated under the laws of Bermuda on 6 October 2020 and, on 7 December 2020,
all of its common shares of par value $0.01 per share were admitted to the standard listing
segment of the Official List of the UK Financial Conduct Authority and admitted to trading on the
LSE\u2019s main market for listed securities. CHL\u2019s registered office is Clarendon House, 2 Church
Street, Hamilton HM 11, Bermuda. CHL's consolidated financial statements as at, and for the year
ended 31 December 2023 include the Company's subsidiaries. The principal activity of Conduit
is to provide reinsurance products and services to its clients worldwide.
A full listing of Conduit's related parties can be found in note 21.
2.
Summary of material accounting policies
The basis of preparation, use of judgements and estimates, consolidation principles and material
accounting policies adopted in the preparation of these consolidated financial statements are set
out below. Excluding percentages, share and per share data or where otherwise stated, all
amounts in tables and narrative disclosures are in millions of US dollars.
Basis of preparation
These consolidated financial statements are prepared on a going concern basis in accordance
with IFRS as issued by the IASB, and the DTR issued by the Financial Conduct Authority, and are
prepared on a historical cost basis, except for items measured at fair value as disclosed in the
relevant accounting policies. In accordance with the requirements of IAS 1, the financial
statements\u2019 assets and liabilities have been presented in order of liquidity, which provides
information that is more reliable and relevant for a financial institution.
In the course of preparing these consolidated financial statements, no judgements have been
made in the process of applying Conduit\u2019s accounting policies, other than those involving
estimations as noted in the \u2018Use of judgements and estimates\u2019 section, that have had a significant
effect on amounts recognised in these consolidated financial statements.
Going concern
The consolidated financial statements of Conduit have been prepared on a going concern basis.
In assessing Conduit's going concern position as at 31 December 2023, the Board have
considered a number of factors, including the current balance sheet position and Conduit\u2019s
strategic and financial plan, taking account of possible changes in trading performance and
funding retention, stress testing and scenario analysis. Conduit\u2019s capital ratios and its capital
resources are comfortably in excess of regulatory solvency requirements, and internal stress
testing indicates Conduit can withstand severe economic and competitive stresses.
As a result of the assessment, the Board have a reasonable expectation that CHL and CRL have
adequate resources to continue in operational existence for the foreseeable future and therefore
believe that Conduit is well placed to manage its business risks successfully. Accordingly, they
continue to adopt the going concern basis in preparing the consolidated financial statements.
Changes in accounting policies and new standards
As previously disclosed, Conduit has initially applied IFRS 17 and IFRS 9, including any
consequential amendments to other standards, from 1 January 2023. There are no other new
or amended IFRS reporting standards, that have a material effect, that have become effective
during the year. IFRS 17 has had a significant impact on accounting for reinsurance contracts.
As a result, Conduit has restated certain comparative amounts and presented an additional
consolidated balance sheet as at 1 January 2022. Conduit\u2019s updated accounting policies for
reinsurance contracts and financial instruments are set out below. Disclosures relating to the
transition to IFRS 17 and IFRS 9 have been set out in note 22.
Future accounting changes
Of the upcoming accounting standard changes, we do not anticipate that any will have a material
impact on the financial statements\u2019 results, or presentation and disclosures.
Use of judgements and estimates
The preparation of financial statements in conformity with IFRS requires Conduit to make
judgements and estimates that affect the reported and disclosed amounts at the balance sheet
date, revenues and expenses during the reporting period and the associated financial statement
disclosures. All estimates are based on management\u2019s knowledge of current facts and
circumstances, assumptions based on that knowledge and their prediction of future events.
Actual results may differ significantly from the estimates made.
The most significant estimates made by management are in relation to the liability for incurred
claims and associated ceded reinsurance recoveries, as discussed in note 3 and note 14.
Less significant estimates are made in determining the estimated fair value of certain financial
instruments, as discussed in note 3 and note 12.
In addition, some management judgement is exercised in determining the total premium
cashflows expected to be received from reinsurance contracts that are used to determine the
amount of reinsurance revenue recognised in the period.
While not significant, estimates are also used in the estimated fair value of the MIP as discussed
in note 7.
Consolidation principles
These consolidated financial statements comprise the financial statements of CHL and its
subsidiaries as at and for the year ended 31 December 2023. Subsidiaries are those entities that
are controlled by Conduit and are fully consolidated from the date on which Conduit obtains
control and continue to be consolidated until the date when such control ceases. Control is
achieved when Conduit is exposed, or has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns through its power over the subsidiary.
Intragroup balances and transactions are eliminated in preparing the consolidated financial
statements. Subsidiaries\u2019 accounting policies are generally consistent with Conduit\u2019s
accounting policies.
Foreign currency
The functional currency, which is the currency of the primary economic environment in which
Conduit operates, is US dollars. Items included in the financial statements of each entity are
measured using the functional currency. These consolidated financial statements are presented
in US dollars.
Foreign currency transactions are recorded in the functional currency for each entity using the
exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are revalued at period end exchange rates. The resulting
foreign exchange differences on revaluation are recorded in the consolidated statement of
comprehensive income (loss) within net foreign exchange gains (losses). Non-monetary assets
and liabilities denominated in a foreign currency are carried at historic rates. Non-monetary
assets and liabilities carried at estimated fair value and denominated in a foreign currency are
translated at the exchange rate at the date the fair value was determined.
Reinsurance contracts
Prior to IFRS 17 coming into effect, IFRS was silent in respect of certain aspects relating to the
measurement of reinsurance contracts. In such instances, the IFRS framework allows reference
to another comprehensive body of accounting principles. Conduit\u2019s management therefore
determined appropriate measurement bases, to provide the most useful information to users
of the financial statements, using their judgement and considering US GAAP.
IFRS 17 sets out the classification, measurement and presentation and disclosure requirements for
reinsurance contracts. It requires reinsurance contracts to be measured using current estimates
and assumptions that reflect the timing of cash flows and recognition of profits as insurance
services are delivered. The standard provides two main measurement models which are the
General Measurement Model (GMM) and the Premium Allocation Approach (PAA).
The PAA simplifies the measurement of reinsurance contracts for remaining coverage, or pre-
claims, in comparison to the GMM. The PAA is similar to Conduit\u2019s previous accounting policies
under IFRS 4 for calculating revenue, however there are some key presentation changes with
respect to certain commissions. The GMM is used for the measurement of the liability for
incurred claims.
PAA eligibility
Under IFRS 17, Conduit\u2019s reinsurance contracts issued and ceded reinsurance contracts held
are all eligible to be measured by applying the PAA, due to meeting the following criteria:
\u2014
Loss-occurring reinsurance contracts with coverage period of one year or less are
automatically eligible; and
\u2014
Modelling of risk-attaching contracts or contracts with a coverage period greater than one
year produces a measurement for the group of reinsurance contracts that does not differ
materially from that which would be produced applying the GMM.
Classification
Contracts that transfer significant reinsurance risk at the inception of the contract are accounted
for as reinsurance contracts. Contracts purchased and held by Conduit under which it transfers
significant reinsurance risk to a counterparty are accounted for as ceded reinsurance contracts.
Contracts that do not transfer significant reinsurance risk are accounted for as investment
contracts. Reinsurance risk is transferred when a reinsurer agrees to compensate a policyholder
if a specified uncertain future event adversely affects the policyholder.
Conduit\u2019s accounting policies apply to both reinsurance contracts issued and ceded reinsurance
contracts held unless explicitly referenced as applying to contracts issued or ceded only. Conduit
writes both excess of loss and proportional (also known as quota share or pro-rata) reinsurance
contracts. The type of contract impacts the recognition of reinsurance revenue. Contract types
are discussed on page 106.
Separating components from reinsurance contracts
IFRS 17 distinguishes three components that, if embedded in a reinsurance contract, should be
bifurcated, and accounted for separately. These are:
\u2014
Cash flows relating to embedded derivatives that are required to be separated;
\u2014
Cash flows relating to distinct investment components; and
\u2014
Promises to transfer distinct goods or distinct non-insurance services.
IFRS 17 then applies to all remaining components of the contract. Conduit does not have any
contracts containing non-insurance components that require separation. Where contracts contain
multiple reinsurance components that meet the requirements for separation, these are separated
and accounted for as standalone contracts.
Some reinsurance contracts issued contain profit sharing arrangements, such as profit
commissions and no claims bonuses. Under these arrangements, there is a minimum guaranteed
amount that the policyholder will always receive either in the form of profit commission, or as
reimbursement for claims, or another contractual payment, irrespective of the insured event
happening. These are typically considered non-distinct investment components. Non-distinct
investment components are not separated from the reinsurance contract as they are closely
interrelated to the measurement of the reinsurance contract. However, the impact of the non-
distinct investment components are excluded from the consolidated statement of comprehensive
income (loss) by adjusting reinsurance revenue and reinsurance service expenses by the
minimum amount due. There is no impact to the reinsurance service result as there is an equal
reduction to both revenue and expenses.
Level of aggregation
Conduit manages reinsurance contracts issued by class of business within an operating segment.
Classes of business are aggregated into portfolios of contracts that are subject to similar risks.
Contracts within each portfolio are grouped into groups of contracts that are issued within a
calendar year, the annual cohort, and are (i) contracts that are onerous at initial recognition; (ii)
contracts that at initial recognition have no significant possibility of subsequently becoming
onerous; or (iii) a group of remaining contracts. These groups represent the level of aggregation
at which reinsurance contracts are initially recognised and measured. Such groups are not
subsequently reconsidered.
Onerous contracts
Under the PAA, it is assumed there are no contracts in the portfolio that are onerous at initial
recognition, unless there are facts and circumstances that may indicate otherwise. Management
primarily considers the following to determine whether there are facts and circumstances that
mean a group of contracts are onerous:
\u2014
Pricing information;
\u2014
Results of similar contracts it has recognised; and
\u2014
External factors, such as a change in market experience or regulations.
If a group of contracts becomes onerous, Conduit increases the carrying amount of the liability
for remaining coverage to the amount of the fulfilment cash flows with the amount of such an
increase recognised immediately in reinsurance service expenses. Subsequently, Conduit
amortises the amount of the loss component by decreasing reinsurance service expenses. The
loss component amortisation is based on the passage of time over the remaining coverage
period of contracts within an onerous group. If facts and circumstances indicate that the
expected profitability of the onerous group during the remaining coverage has changed, then
Conduit remeasures the loss component by reassessing the fulfilment cash flows as required until
the loss component is reduced to zero.
Where a loss component is expected to be partially or fully recovered by ceded reinsurance
contracts, the amount of recovery is recognised in ceded reinsurance recoveries.
Recognition
Conduit recognises groups of reinsurance contracts it issues from the earliest of:
\u2014
The beginning of the coverage period of the group of contracts;
\u2014
The date when the first payment from the cedant is due or when the first payment is received
if there is no due date; or
\u2014
For a group of onerous contracts, the date when facts and circumstances indicate that the
group is onerous.
For ceded reinsurance contracts Conduit recognises the group of contracts:
\u2014
If the reinsurance contracts provide proportionate coverage, at the later of the beginning of
the coverage period of the group, or the initial recognition of the underlying covered
reinsurance contracts issued; or
\u2014
For non-proportionate coverage, the beginning of the coverage period of the group of
contracts, unless an onerous group of underlying reinsurance contracts have been recognised
and the ceded reinsurance contract has been signed before that date.
Modification and derecognition
Conduit derecognises reinsurance contracts when:
\u2014
The rights and obligations relating to the contract are extinguished (meaning discharged,
cancelled or expired); or
\u2014
The contract is modified such that the modification results in a change in the measurement
model or the applicable standard for measuring a component of the contract, substantially
changes the contract boundary, or requires the modified contract to be included in a different
group. In such cases, Conduit derecognises the initial contract and recognises the modified
contract as a new contract. When a modification is not treated as a derecognition, Conduit
recognises amounts paid or received for the modification with the contract as an adjustment
to the relevant liability for remaining coverage.
Contract boundaries
The measurement of a group of reinsurance contracts includes all future cash flows expected to
arise within the boundary of each contract in the group. Cash flows are within the boundary of a
reinsurance contract if they arise from substantive rights and obligations that exist during the
reporting period in which Conduit can compel the cedant to pay the premiums, or in which
Conduit has a substantive obligation to provide the cedant with services. A substantive obligation
to provide services ends when Conduit has the practical ability to reassess the risks of the cedant
and, as a result, can set a price of level of benefits that fully reflects those risks. Where Conduit
issues multi-year contracts and does not have the ability to re-price on each policy anniversary
the contract is considered one contract and therefore future cash flows from each of the annual
periods are considered on initial recognition.
For ceded reinsurance contracts the cash flows are within the boundary of the contract if
Conduit has a substantive right to receive services or if Conduit is compelled to pay premiums
to the reinsurer. The substantive right to receive services from the reinsurer ends when:
\u2014
The reinsurer has the practical ability to reassess the risks transferred to it and can set a price
of level of benefits that fully reflects those risks; or
\u2014
The reinsurer has a substantive right to terminate the coverage.
Conduit assesses the contract boundary at initial recognition and at each subsequent reporting
date to include the effects of changes in circumstances on Conduit\u2019s substantive rights and
obligations. The assessment of the contract boundary, which defines the future cash flows that
are included in the measurement of the contract, requires judgement and consideration of
Conduit's substantive rights and obligations. Conduit issues risk-attaching reinsurance contracts
which provide reinsurance coverage to underlying contracts issued within the terms of the
contract. While the contracts can have an annual term the contract boundary is assessed with
consideration of the coverage period of the underlying contracts. Contracts that cover claims
from underlying contracts within the contract period, loss-occurring contracts, are typically
annual term. Where contracts contain multi-year terms, Conduit exercises judgement on whether
provisions within the contract allow cancellation or re-pricing at each anniversary of the contract.
Measurement \u2013 Liability for remaining coverage
On initial recognition of each group of contracts, the carrying amount of the liability for remaining
coverage is measured as the premiums received on initial recognition, if any, minus any
reinsurance acquisition expense cash flows allocated to the group of contracts and any amounts
arising from the derecognition of the prepaid reinsurance acquisition expense cash flows asset.
Conduit has chosen not to expense reinsurance acquisition expense cash flows on contracts with
coverage of one year or less when they are incurred in order to apply a consistent treatment of
reinsurance acquisition expense cash flows for all contracts, regardless of the length of coverage.
Subsequently, at the end of each reporting period, the liability for remaining coverage is:
\u2014
Increased by any premiums received in the period;
\u2014
Decreased for reinsurance acquisition expense cash flows paid in the period;
\u2014
Decreased for the amounts of expected premium cash flows recognised as reinsurance
revenue for the services provided in the period;
\u2014
Increased for the amortisation of reinsurance acquisition expense cash flows in the period
recognised as reinsurance service expenses; and
\u2014
Decreased for any non-distinct investment component paid or transferred to the liability
for incurred claims.
Conduit has elected not to adjust the liability for remaining coverage for the time value of money
as its reinsurance contracts do not contain a significant financing component.
Conduit measures the reinsurance asset for remaining coverage for its ceded reinsurance
contracts that it holds on the same basis as reinsurance contracts issued, adapted to reflect the
features that differ between contracts issued versus contracts held.
Reinsurance revenue recognised in the period is based on the total premium cash flows expected
to be received over the lifetime of the contract, net of any deductions that are paid to the cedant.
The amount of total expected revenue from a contract recognised in the period is dependent on
the type of reinsurance contract, as discussed below.
Excess of loss contracts
For the majority of excess of loss contracts, expected premium cash flows are assessed based on
the minimum and deposit or flat premium, as defined in the contract. Subsequent adjustments to
the minimum and deposit premium are assessed in the period in which they are determined. For
excess of loss contracts where no deposit is specified in the contract, premium cash flows are
assessed based on estimates of premiums provided by the ceding company. Subsequent
adjustments, based on reports of actual premium by ceding companies, or revisions in estimates,
are assessed in the period in which they are determined. For multi-year policies that are payable
in annual instalments, where the reinsured has the sole ability to cancel, the total expected
premium cash flows for all annual periods are assessed at the inception of the contract. Where
unilateral cancellation by the reinsurer exists at each anniversary of the contract the annual
periods are assessed as separate contracts.
Reinsurance revenue for excess of loss contracts is generally recognised evenly over the term
of the underlying risk period of the reinsurance contract, except where the period of risk differs
significantly from the contract period. In these circumstances, reinsurance revenue is recognised
over the period of risk in proportion to the amount of reinsurance protection provided. Where
contract terms require the reinstatement of coverage after a ceding company\u2019s loss, as the
reinstatement is contingent on the loss, the estimated mandatory reinstatement premiums are
recorded within reinsurance service expenses.
Proportional contracts
Premium cash flows for proportional contracts are assessed based on estimates of ultimate
premiums provided by the ceding company, supplemented by management's estimates of
premiums based on its experience with the ceding company, familiarity with each market, the timing
of the reported information and its understanding of the characteristics of each class of business.
Initial estimates of premium cash flows are assessed in the period in which the contract incepts, or
the period in which the contract is bound, if later. Contracts written on a \u2018risks-attaching\u2019 basis cover
claims which attach to the underlying reinsurance policy written during the term of the respective
policy. Reinsurance revenue on such policies generally extend beyond the original term of the
contract. Subsequent adjustments, based on reports of actual premium by the ceding company,
or revisions in estimates, are assessed in the period in which they are determined.
Reinsurance acquisition expense cash flows
Reinsurance acquisition expense cash flows represent the cash flows that arise from the cost
of selling and underwriting a group of reinsurance contracts and include:
\u2014
Contract specific costs, such as brokerage;
\u2014
Operating expenses that are incurred in relation to the fulfilment of reinsurance contracts; and
\u2014
An allocation of fixed and variable overheads.
Reinsurance acquisition expenses are deferred over the period in which the related premiums are
earned to the extent they are recoverable out of expected future revenue margins and
recognised within reinsurance service expenses.
Commissions that are paid to cedants, such as ceding commissions, are not treated as
reinsurance acquisition expense cash flows as they do not relate to a service. Such commissions
are treated as a reduction in the expected premium recognised as reinsurance revenue.
Ceded reinsurance expenses
Ceded reinsurance is purchased in the normal course of business to increase capital capacity or
to limit the impact of individual risk losses and loss events impacting multiple cedants, such as
natural-catastrophes, or both. Conduit may purchase ceded reinsurance on both an excess of loss
and a proportional basis, and may supplement this with the use of ceded reinsurance cover linked
to the issuance of catastrophe bonds or other capital market products. Ceded reinsurance
premiums are recognised as ceded reinsurance expenses in the same manner as reinsurance
contracts issued, depending on the terms of the contract. Ceding commissions received are
deducted from the premium paid that is recognised in ceded reinsurance expenses. Other
expenses incurred in the placing of ceded reinsurance contracts that are in relation to a service
by a third party, such as brokerage, are recognised in ceded reinsurance expenses.
Measurement \u2013 Liability for incurred claims
The liability for incurred claims represents the estimated ultimate cost of settling all reinsurance
claims arising from events that have occurred up to the end of the reporting period, including the
operating costs that are expected to be incurred in the course of settling such claims,
reinstatement premiums on specific loss events, profit commissions and similar expenses that are
contingent on claims plus a provision for IBNR. The liability for incurred claims is derived from the
estimated fulfilment cash flows relating to expected claims. The fulfilment cash flows incorporate,
in an unbiased way, all reasonable and supportable information available, without undue cost or
effort, about the amount, timing and uncertainty of those future cash flows. They also include an
explicit adjustment for non-financial risk, the risk adjustment. Estimates of future cash flows for
incurred claims are discounted on initial recognition and then re-measured to current rates as at
the reporting date.
Cash flows for outstanding losses are estimated initially on the basis of reported losses received
from cedants. Cash flows for ACRs are determined where management\u2019s expectation of the
ultimate cost of the reported loss is greater than that reported. Estimated cash flows for IBNR
may also consist of a provision for additional development in excess of losses reported by
cedants, as well as a provision for losses which have occurred but have not yet been reported
by cedants.
Cash flows for IBNR are estimated initially using expected loss and loss adjustment expense
ratios which are selected based on information derived by underwriters and actuaries during the
initial pricing of the business. These estimates are reviewed regularly and, as experience develops
and new information is received, the cash flows are adjusted as necessary. As actual loss
information is reported, and Conduit develops its own loss experience, management will use
various actuarial methods as well as a combination of management\u2019s judgement and experience,
historical reinsurance industry loss experience and estimates of pricing adequacy trends to
estimate cash flows for IBNR.
The estimation of the liability for incurred claims is a complex process which incorporates a
significant amount of judgement. It is reasonably possible that uncertainties in the reserving
process, delays in cedants reporting losses to Conduit, together with the potential for unforeseen
adverse developments, could lead to a material change in the liability for incurred claims.
Any amounts recoverable from reinsurers are estimated using the same methodology as for the
underlying losses except for the requirement under IFRS 17 to assess the ceded reinsurance
recovery cash flows for the effect of any risk of non-performance, including expected credit
losses. Management monitors the creditworthiness of its reinsurers on an ongoing basis and
assesses any reinsurance assets for the risk of non-performance, with a provision for non-
performance risk being recognised as an expense in the period in which it is determined.
Presentation of reinsurance contracts
Reinsurance assets and liabilities
The asset or liability for a portfolio of reinsurance contracts is the net position of both the liability
for remaining coverage and the liability for incurred claims. Whether a portfolio is in a liability or
asset position is typically impacted by the timing of cash flows received versus cash flows paid.
Conduit presents separately in the consolidated balance sheet portfolios of reinsurance contracts
issued and held that are in an asset position and those that are in a liability position.
All reinsurance contract assets and liabilities are deemed monetary assets and liabilities and are
revalued at period end exchange rates.
Reinsurance revenue
Reinsurance revenue in the consolidated statement of comprehensive income (loss) is the
amount of expected premium cash flows, net of any deductions paid to the cedant and excluding
any non-distinct investment component. Conduit allocates the expected premium receipts to
each period of coverage on the basis of passage of time or the expected risk pattern if it differs
significantly from the passage of time.
Reinsurance service expenses
Reinsurance service expenses in the consolidated statement of comprehensive income (loss)
includes changes in the liability for incurred claims that do not arise from the application of
discount rates, being recognition and amortisation of any loss components, amortisation of
reinsurance acquisition expense cash flows and other attributable operating expenses.
Ceded reinsurance income and expenses
Conduit has elected to present the income and expenses from ceded reinsurance contracts
separately in the consolidated statement of comprehensive income (loss). Ceded reinsurance
expenses represent the total expected ceded premiums and other amounts, that are not
contingent on recoveries, payable to the reinsurer. Conduit recognises ceded reinsurance
expenses based on the passage of time over the coverage period of a group of contracts or
expected risk pattern. Income from ceded reinsurance contracts includes expected recoveries
on incurred claims, changes in expected recoveries related to past service, the provision for the
effects of changes in risk of reinsurer non-performance plus other amounts that are contingent
on recoveries, such as ceded profit commissions payable to the reinsured.
Net reinsurance finance income (expense)
Reinsurance finance income (expense) includes the changes in the carrying amounts of
reinsurance and ceded reinsurance assets and liabilities arising from the unwind of discount
recognised in prior periods and the effects of remeasuring to current discount rates plus other
financial assumptions. Conduit has elected to disaggregate the changes in the risk adjustment
for the time value of money and present in net reinsurance finance income (expense).
Conduit has chosen not to disaggregate finance income (expense) between other comprehensive
income (OCI) and comprehensive income.
Financial instruments
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks, money market
funds, and other short-term highly liquid investments with a maturity of three months or less at
the date of purchase. Carrying amounts approximate fair value due to the short-term nature and
high liquidity of the instruments.
Investments
Conduit\u2019s fixed maturity securities portfolio meets the requirements for mandatory classification
as FVTPL and is carried at estimated fair value in the consolidated balance sheet. The
classification of financial assets is determined at the time of initial purchase. A financial asset is
classified at FVTPL if it is held within a business model that is managed and evaluated on a fair
value basis or if acquired principally for the purpose of selling in the short term, or if it forms part
of a portfolio of financial assets in which there is evidence of short-term profit taking.
Presentation of these securities in the FVTPL category is consistent with how management
monitors and evaluates the performance of these securities on a fair value basis.
Regular way purchases and sales of investments are recognised at estimated fair value on the
trade date, and are subsequently carried at estimated fair value. Balances pending settlement are
reflected in the consolidated balance sheet in other assets or other payables. The estimated fair
value of Conduit\u2019s fixed maturity securities portfolio is determined based on bid prices from
recognised exchanges, broker-dealers, recognised indices or pricing vendors. Changes in
estimated fair value of investments classified as FVTPL are recognised in the consolidated
statement of comprehensive income (loss) within net unrealised gains (losses) on investments.
Investments are derecognised when Conduit has transferred substantially all the risks and
rewards of ownership. On derecognition of an investment held at FVTPL, previously recorded
unrealised gains and losses are recycled from net unrealised gains (losses) on investments to net
realised gains (losses) on investments.
Interest income, amortisation and accretion of premiums and discounts on fixed maturity
securities are calculated using the effective interest rate method and recognised in net
investment income. The carrying value of accrued interest income approximates estimated fair
value due to its short-term nature and high liquidity.
Leases
Conduit recognises a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the initial measurement of
the corresponding lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of any costs to be
incurred at the expiration of the lease agreement.
Right-of-use assets are subsequently measured at cost less accumulated depreciation and any
impairment losses. Straight-line depreciation is calculated from the commencement date of the
lease to the earlier of either the end date of the lease term or the useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments at the
lease commencement date. Lease payments are discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, Conduit's incremental borrowing rate. Lease
payments included in the measurement of the lease liability include fixed payments (including in-
substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease liability is subsequently measured by increasing the lease carrying amount to reflect the
interest due on the lease liability using the effective interest rate method and reducing the
carrying amount to reflect the lease payments made. Conduit re-measures the lease liability and
the related right-of-use asset whenever there is a change in future lease payments arising from
a change in index or rate, if Conduit changes its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised in-substance fixed lease payment.
Right-of-use assets and lease liabilities are presented as separate financial statement line items in
the consolidated balance sheet.
Employee benefits
Equity-based incentives
Conduit currently operates a MIP under which shares are subscribed for or nil cost options are
granted. The fair value of the instruments granted is estimated on the date of grant. The
estimated fair value is recognised as an expense pro-rata over the vesting period of the
instrument, adjusted for the impact of any non-market vesting conditions. No adjustment to
vesting assumptions is made in respect of market vesting conditions.
Conduit also previously established a DSBP. A percentage of each employee's bonus is
automatically deferred into shares as nil cost options. These nil cost awards vest annually in
separate equal tranches over a three-year period from the date of grant and do not have
associated performance criteria attached to the awards. These awards accrue dividend
equivalents for all dividends declared where the record date falls between the grant date and
date of exercise, and are paid at the time of exercise.
During 2023 Conduit established an LTIP. These nil cost awards granted to staff vest over a three-
year period from the date of grant and do not have associated performance criteria attached to
the awards. These awards accrue dividend equivalents for all dividends declared where the record
date falls between the grant date and date of exercise, and are paid at the time of exercise.
At each balance sheet date, Conduit revises its estimate of the number of instruments that are
expected to become exercisable. It recognises the impact of the revision of original estimates, if
any, as equity-based incentive expense in the consolidated statement of comprehensive income
(loss), and a corresponding adjustment is made to other reserves in shareholders\u2019 equity over the
remaining vesting period.
On exercise, the differences between the expense charged to the consolidated statement of
comprehensive income (loss) and the actual cost to Conduit, if any, is transferred to other
reserves in shareholders\u2019 equity.
Pensions
Conduit\u2019s pension plans are based on defined contributions or equivalent cash in lieu, subject to
applicable law and local market standards. On payment of contributions to the plans or cash in
lieu there is no further obligation to Conduit. Contributions or payments of cash in lieu are
recognised as employee benefits in the consolidated statement of comprehensive income (loss)
in the period when the services are rendered.
Tax
Income tax on the profit or loss for the period comprises current and deferred tax. Current tax
is the expected tax payable on the taxable income for the year using tax rates enacted or
substantively enacted at the year-end reporting date and any adjustments to tax payable in
respect of prior periods.
Deferred tax is provided, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted
at the reporting date. Deferred tax assets are recognised in the consolidated balance sheet to the
extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Own shares
Own shares include shares repurchased under share repurchase authorisations and held in
treasury, plus shares purchased and held in trust, for the purposes of employee equity-based
incentive schemes. Own shares are deducted from shareholders\u2019 equity. No gain or loss is
recognised on the purchase, sale, cancellation or issue of own shares and any consideration paid
or received is recognised directly in equity.
Share capital and issuance costs
Shares are classified as shareholders' equity if there is no obligation to transfer cash or other
financial assets. Transaction costs that are attributable to the issuance of new shares are treated
as a deduction from equity.
Risk disclosures
Introduction
Conduit is exposed to risks from several sources, classified into six primary risk categories. The
primary risk categories are: (a) reinsurance risk; (b) market risk; (c) liquidity risk; (d) credit risk;
(e) operational risk; and (f) strategic risk. These are discussed in detail on the following pages.
The primary risk to Conduit is reinsurance risk.
The Board is responsible for determining the nature and extent of the principal risks Conduit is
willing to take in achieving its strategic objectives and should maintain sound risk management
and internal control systems. To this end, the Board has established various committees to
support the execution of its responsibilities and has reviewed the committee structures at CRL.
The Board, and committees thereof, define the risk preferences and appetites within which
management is authorised to operate.
The risk function is responsible for supporting the Board, and the CRL Board, with the day-to-day
oversight of the risks that Conduit seeks or is exposed to in pursuit of its strategic objectives, and
the satisfaction of certain regulatory risk management expectations relevant to CRL. The
framework under which risks are managed contemplates risk appetite and tolerance constraints.
Risk appetite is prescribed by the Board and is reviewed at least annually, with consideration of
the financial and operational capacity of Conduit. The use of financial capacity in this context
relates to calculated or modelled capital requirements, based on residual unmitigated risk
exposures. Current capital requirements are determined by reference to rating agency and
regulatory capital requirements.
Day-to-day management of risk is the responsibility of management, operating within the defined
appetite and tolerances. The risk framework prescribes a standardised approach to the
management of risk, oversight and challenge by the risk function and independent assurance
provided by the internal audit function. The risk framework also addresses the reporting of risks,
emerging risks, risk events and compliance with risk appetite and tolerance statements to
executive management and the Board, and relevant board committees, of CHL and CRL. To
ensure transparency and accountability of the business for all independent Non-Executive
Directors, four Independent Non-Executive Directors from the Board have been appointed to the
Board of CRL. Furthermore, the Board is invited to attend operating entity board level meetings
and see all minutes and records of such operating entity board and committee meetings.
Climate change
Conduit is exposed to risks associated with climate change but also potential opportunities
arising from that risk. Risks from climate change can include physical risk and transition risk.
Physical risks are those relating to the physical impacts of climate change, which can be from
increased frequency and/or severity of climate-related events, or structural, due to longer-term
shifts in climate patterns. Transition risks are those relating to the transition to a lower carbon
economy and include risks such as policy and legal risk, technology risk, market risk and
reputational risk. The potential financial impact from these risks is mitigated by Conduit\u2019s
strategic and risk management policies.
Global tax reform
Conduit continues to monitor developments in local and international taxation. On 27 December
2023 the Bermuda government enacted legislation, the Bermuda Corporate Income Tax Act of
2023 (Bermuda CIT), into law. CHL, CSL, CML and CRL are currently not in scope for this new
legislation. While certain implications of the new Bermuda CIT remain uncertain, Conduit's current
assessment is that it does not meet the criteria to pay any taxes under the Bermuda CIT. If
Conduit were to meet the Bermuda CIT criteria in the future, it is likely that an exemption will be
available for the first five years in which the tax would otherwise apply.
The international tax agenda continues to provide uncertainty to companies. Conduit has a
limited international footprint and underwrites from a single balance sheet and a single
jurisdiction, which limits complexity. As CHL, CSL, CML and CRL do not meet the qualifying
criteria under Bermuda CIT, they continue to benefit from an existing undertaking from the
Bermuda government which exempts them from all Bermuda local income, withholding and
capital gains taxes until 31 March 2035.
a.
Reinsurance risk
Conduit underwrites both short-tail and long-tail reinsurance contracts on a worldwide basis.
These reinsurance contracts transfer insurance risk, including risks exposed to both natural and
man-made catastrophes, and risk and liability losses. The risk in connection with underwriting
reinsurance contracts is, in the event of a covered loss, whether the premiums will be sufficient to
meet the associated loss payments and expenses. The underwriters evaluate and estimate the
level of premiums sufficient to cover expected losses, expenses and profitability through a
combination of sophisticated risk modelling tools, past experience and knowledge of loss events,
current industry trends and broader economic indicators. In order to ensure appropriate
reinsurance risk selection and limits on the concentration and diversification of the aggregate
portfolio, Conduit has established risk management and internal control systems to evaluate and
assess the expected losses of each individual contract, class of business, geographic region and
the aggregate portfolio.
These controls, include, but are not limited to:
\u2014
A five-year strategic plan is produced that defines the over-riding business goals that
management and the Board aim to achieve;
\u2014
A detailed business plan is produced annually and considers current market conditions and
the risk-adjusted profitability of the underwriting portfolio;
\u2014
Conduit's internal capital requirements consider the probability and magnitude of reinsurance
losses varying adversely from the expected losses considered during the underwriting and
subsequent reserving processes;
\u2014
Forecasts are produced periodically to assess the progress toward the business plan and the
strategic plan;
\u2014
Each underwriter has a clearly defined limit of underwriting authority;
\u2014
Each contract underwritten is subject to a pre-bind peer review;
\u2014
An underwriting roundtable meeting, typically held daily, where deal flow, pricing and
opportunities are discussed;
\u2014
Pricing models are used in all areas of the underwriting process and are stored centrally in our
pricing platform;
\u2014
Risk appetite and tolerance statements have been established and the CRO reports quarterly
on adherence;
\u2014
A number of modelling tools are used to model catastrophes and calculate the associated
expected losses; and
\u2014
Outwards reinsurance is purchased to mitigate both frequency and severity of losses, and to
protect Conduit\u2019s capital base.
Operating segments
The underwriting business is comprised of three principal divisions: Property, Casualty and Specialty. These divisions are also considered to be Conduit's operating segments. Details of each operating
segment and reinsurance revenue by geographic region and operating segment are as follows:
2023
2022
Property
Casualty
Specialty
Total
Total
Property
Casualty
Specialty
Total
Total
Year ended 31 December
$m
$m
$m
$m
%
$m
$m
$m
$m
%
US
198.0
118.3
20.6
336.9
53.2
109.8
104.0
3.9
217.7
55.5
Worldwide
101.2
23.4
74.7
199.3
31.5
56.5
14.9
51.4
122.8
31.3
Europe
21.7
28.2
19.7
69.6
11.0
15.7
16.2
7.0
38.9
9.9
Other
24.3
1.9
1.0
27.2
4.3
10.8
1.6
0.6
13.0
3.3
Reinsurance revenue
345.2
171.8
116.0
633.0
100.0
192.8
136.7
62.9
392.4
100.0
Property reinsurance
Conduit is exposed to large natural-catastrophe losses, such as windstorm and earthquake losses,
primarily from assuming risks associated with property treaties. Exposure to natural-catastrophe
events is controlled and measured by managing to predefined limits within stochastic modelling
and deterministic accumulations across classes per geographic zone and peril. The accuracy of
these analyses is limited by the quality of data and the effectiveness of the modelling. It is
possible that a catastrophic event significantly exceeds the expected modelled event loss.
Natural-catastrophe risk is written across both the US and internationally on an excess of loss
and capped quota share basis. Reinsurance structures are offered typically in respect of peril,
geography and probability of activation or exhaustion.
Property per risk treaties are offered with the strategy to minimise natural-catastrophe exposure,
focusing on fire risk. This is considered by both natural-catastrophe specific metrics, treaty
conditions and excess of loss structure.
Ceded reinsurance may be purchased to mitigate exposures to large natural-catastrophe losses.
Ceded reinsurance is typically purchased on an ultimate net loss excess of loss basis, however
industry loss warranties, catastrophe bonds issuances, or proportional treaty arrangements may
also be utilised.
Casualty reinsurance
Conduit underwrites a balanced portfolio of casualty classes of business, comprised of both
excess of loss and proportional contracts, on a worldwide basis.
Casualty claims tend to take longer to be reported and ultimately settled than physical damage
risks. Conduit typically maintains a liability for incurred claims for casualty classes of business
over a longer period of time than for the property and specialty classes of business where the
costs of claims are generally known and settled within a shorter time frame.
Conduit will purchase ceded reinsurance to protect against any \u2018clash\u2019 between losses arising
in its casualty portfolio.
The sub-classes of casualty business include directors and officers liability, financial institutions
liability, general liability for multiple sub-classes and, on an excess and umbrella basis, medical
malpractice, professional liability and transactional liability. Conduit has limited appetite for, and
generally avoids, workers compensation, standalone auto and cyber treaties.
Directors and officers liability
Directors and officers liability policies offer protection for company managers and directors and
officers against claims that may arise in the normal course of operations. Coverage includes legal
expenses and liability to shareholders, bondholders, creditors or others owing to actions or
omissions by a director or officer of a private or public corporation, or not-for-profit organisation.
Financial institutions liability
Financial institutions coverage may cover risks such as computer and commercial crime,
professional indemnity and civil liability.
General liability
General liability commonly provides cover for losses arising from the legal liability of an original
insured and statutory liability in the case of employers\u2019 liability which result in bodily injury or
disease to third parties or physical damage to third-party property. Conduit offers a wide range
of general liability reinsurance products including contractors general liability, excess general
liability, umbrella, energy and environmental.
Medical malpractice
Medical malpractice reinsurance generally covers professional liability and errors and omissions
specifically in the healthcare industry, protecting physicians and other healthcare professionals
against claims of negligent acts or injury of patients under their care. Medical malpractice
reinsurance does not cover intentional or criminal acts.
Professional liability
Professional liability generally provides coverage for third-party losses resulting from legal
liability or civil liability or negligence, errors or omissions or wrongful acts arising from the
provision of, or failure to provide, professional services by an original insured. Sub-classes of this
business would include lawyers, accountants, architects and engineers, errors and omissions, plus
miscellaneous professional liability.
Transactional liability
Transactional liability reinsurance is used by parties to various business transactions, such as
mergers, acquisitions and divestitures, to transfer certain transaction-related risks to the
reinsurance market. There can be a broad range of risks covered, including warranty, litigation,
pension and tax uncertainties and employment matters.
Specialty reinsurance
Conduit's specialty classes of business are written on both an excess of loss and proportional
basis and can provide reinsurance coverage against physical damage (short-tail) or against legal
liability (long-tail) losses. Although specialty classes of business are exposed to natural-
catastrophe risk, it is generally to a lesser extent than property classes of business. They are more
likely to be affected by specific large loss events such as accidents, collisions, fires and similar
man-made catastrophe events. Specialty classes of business are highly diverse in nature and
require specific market expertise and experience. The specialty classes of business include, but
are not limited to, aviation, energy, engineering and construction, environmental, marine,
renewables, political violence and terrorism and are offered on both a specific and a whole
account basis.
Conduit purchases ceded reinsurance protection to reduce exposure to both large risk losses and
an accumulation of smaller claims arising from any one event. Ceded reinsurance is typically
purchased on an excess of loss basis, but, from time to time, proportional arrangements may be
entered into.
Aviation
The aviation class of business provides cover to the insurers of airlines, aircraft, airports, aircraft
manufacturers and aviation related products, and includes cover for the aircraft themselves as
well as losses arising from passenger and third-party liability claims against airlines and/or
operators and/or manufacturers.
Energy
The energy class of business provides reinsurance cover for a global spread of accounts that
includes risks such as downstream energy, midstream energy, upstream energy, energy liability,
construction and natural perils related coverages such as Gulf of Mexico wind and hurricane
programmes. Policies typically cover legal liability of an insured and property for physical
damage (including natural-catastrophe), machinery breakdown perils and consequential business
interruption exposure. Loss limits are set at a level commensurate with the modelled estimated
maximum loss scenario.
Engineering and construction
The class covers a wide range of products falling under related property and business income
protection on a worldwide basis. These products include, but are not limited to, contractors\u2019 all
risks, erection all risks, plant and equipment, machinery breakdown and loss of profits. Projects
range from small bespoke to large civil engineering constructions. The main hazards are fire and
explosion, theft, collapse and natural perils such as earthquake, windstorm and flood.
Environmental
Environmental products generally provide cover relating to the environmental and energy
casualty classes with regard to pollution. The related sectors typically include energy,
construction, and industrial which includes both commercial and residential risks.
Marine
Marine cargo is an international account and covers the reinsurance of commodities or goods in
transit. Typically, transit cover is provided on an all-risks basis for marine perils for the full value
of the goods concerned. Static cover is also provided for losses to cargo, from both elemental
and non-elemental causes. In addition, the cargo account can include for example, fine art, vault
risks, artwork on exhibition and marine war and terrorism business relating to cargo in the
ordinary course of transit.
Marine liability commonly provides cover for legal liability for losses arising from the operation
of marine and offshore related assets including but not limited to the reinsurance of the
International Group of Protection and Indemnity Clubs, the operation and management of ships
and vessels, cargo, and marine builders' risks covering the building of ocean-going vessels and
offshore assets.
The marine hull class generally consists of worldwide coverage spanning physical damage, hull
and machinery breakdown, loss of hire and mortgagees\u2019 interests for a range of maritime vessels
from cargo and passenger ships to private pleasure craft. Products typically cover both risk and
catastrophe exposures.
Renewables
The class covers a wide range of tailored solutions globally. The class includes offshore and
onshore wind power, ground and rooftop solar power plus bioenergy fuels and associated
operations. The risks exposed are quite unique, from difficult construction operations to installing
complex equipment that is routinely exposed to natural hazards. Policies typically include cover
for physical damage, legal liability, machinery breakdown and business interruption for both
construction and operational phases.
Political violence and terrorism
Political violence and terrorism coverage is provided for US and worldwide property risks, but
typically excluding nuclear, chemical, biological and cyber coverage in most territories.
Whole account
Coverage is generally provided on a worldwide basis and covers a broad spectrum of the
cedants risks under a single policy. The classes of business covered under a whole account
reinsurance policy can include property, specialty and casualty classes of business including
commercial and personal automobile, general liability, workers\u2019 compensation, employers\u2019 liability,
excess casualty and umbrella, as well as selected professional liability coverage.
Ceded reinsurance
Ceded reinsurance is purchased in the normal course of business to increase capital capacity,
limit the impact of individual risk losses and loss events impacting multiple cedants (such as
natural-catastrophes), or both. Ceded reinsurance may also be purchased from time to time to
optimise the risk-adjusted return of Conduit's aggregate underwriting portfolio. Conduit may
purchase ceded reinsurance on both an excess of loss and proportional basis, and may also use
reinsurance linked to catastrophe bonds or other capital market products. The mix of ceded
reinsurance coverage is dependent on specific loss mitigation requirements, market conditions
and available capacity. In certain market conditions, Conduit may deem it more economic to hold
capital than purchase ceded reinsurance. Ceded reinsurance does not relieve Conduit of its
obligations to policyholders. Conduit is exposed to reinsurance risk where ceded reinsurance
contracts put in place to reduce gross reinsurance risk do not perform as anticipated, result in
coverage disputes or prove inadequate in terms of the limits purchased. Failure of a ceded
reinsurer to pay a valid claim is considered a credit risk which is detailed in the credit risk section
below. Ceded reinsurance coverage is not intended to be available to meet all potential loss
circumstances. Conduit will retain certain losses, as the cover purchased is unlikely to transfer the
totality of Conduit\u2019s exposure. Any loss amount which exceeds the ceded reinsurance coverage
purchased would be retained by Conduit. Some ceded reinsurance policies have limited
reinstatements, therefore the number of claims which may be recovered on second, and
subsequent loss circumstances is limited.
Under Conduit\u2019s ceded reinsurance security policy, ceded reinsurers are assessed and approved
based on their financial strength ratings, among other factors. These decisions are regularly
reviewed as an integral part of the business planning and performance monitoring process.
The management Counterparty Security Committee examines and approves all Conduit\u2019s ceded
reinsurers to ensure that they possess suitable security.
Fulfilment cash flows
Fulfilment cash flows consist of:
\u2014
The estimates of future cash flows required in the ultimate settlement of claims;
\u2014
An adjustment for the time value of money; and
\u2014
A risk adjustment for non-financial risk
Estimates of future cash flows
A significant and critical judgement and estimate made by management is the estimation of
future cash flows in relation to ultimate claims settlements. Management estimates, in an
unbiased way, future cash flows to cover its estimated liability for both reported and unreported
claims on events that have occurred up to the latest valuation date, incorporating all reasonable
and supportable information that is available without undue cost or effort. Management uses
methodologies that calculate a point estimate for the ultimate losses, representing management\u2019s
best estimate of ultimate future cash flows. Conduit estimates the future cash flows by taking
outstanding losses, adding an estimate for IBNR and, if deemed necessary, ACRs which represent
Conduit's estimate for losses related to specific contracts that management believes may not be
adequately estimated by the cedant as at that date.
Liabilities for incurred claims are not permitted until the occurrence of an event which may give
rise to a claim. As a result, only provisions applicable to losses that have occurred up to the
reporting date are established, with no allowance for the provision of a contingency liability to
account for expected future losses or for the emergence of new types of latent claims. Claims
arising from future events can be expected to require the establishment of substantial liabilities
from time to time. The estimated timing of the future cash flows is determined by applying cash
flow payment assumptions to the best estimate of ultimate future cash flows.
The reserving process is dependent on management's judgement and is subject to meaningful
uncertainty due to both qualitative and quantitative factors, including, but not limited to: the
nature of the business written, whether it is short-tail or long-tail, whether it is excess of loss or
proportional, the magnitude and timing of loss events, the geographic areas impacted by loss
events, time lags in the reporting process from the original claimant, limited claims data, policy
coverage interpretations, case law, regulatory directives, demand surge and inflation, potential
uncertainties related to reinsurance and ceding company reserving practices, and other factors
inherent in the estimation process for the net ultimate liability for incurred claims.
The judgements and estimates used in establishing future cash flow calculations may be revised
as additional experience or other data becomes available. Future cash flows are also reviewed as
new or improved methodologies are developed and as laws or regulations change. Furthermore,
as a business operating within a broker market, management must rely on loss information
reported to brokers by other insurers and their loss adjusters, who must estimate their own losses
at the policy level, often based on incomplete and changing information. The information
management receives varies by cedant and may include paid losses, estimated case reserves and
an estimated provision for IBNR reserves. Additionally, reserving practices and the quality of data
reporting may vary among ceding companies, which adds further uncertainty to management\u2019s
estimates of the ultimate losses.
Conduit\u2019s internal actuaries review the assumptions and methodologies on a quarterly basis and
develop an actuarial best estimate of Conduit\u2019s future cash flows using the processes outlined
above. The management Reserving Committee reviews the estimate for the liability for incurred
claims on a quarterly basis. The reserves are subject to a semi-annual independent review by
Conduit\u2019s external actuaries. The results of the internal and independent reserve reviews are
presented to the Audit Committee.
Risk adjustment
The risk adjustment for non-financial risk is the compensation that Conduit requires for bearing
the uncertainty about the amount and timing of the cash flows arising from reinsurance
contracts. Conduit determines the risk adjustment at the entity level and allocates to the groups
of reinsurance contracts.
Conduit has estimated the risk adjustment using a margin-based approach. The margins are
calibrated to a targeted confidence interval range using the BMA BSCR risk framework. Conduit
expects that the risk adjustment recognised within the fulfilment cash flow will fall within the
range of the 75th and the 85th percentile, gross and net of ceded reinsurance. Conduit estimates
that the risk adjustment net of ceded reinsurance corresponds to the 82nd percentile as at
31 December 2023 and to the 81st percentile as at 31 December 2022.
Short-tail versus long-tail
Claims relating to short-tail risks are generally reported more promptly than those relating to
long-tail risks. The timeliness of reporting can be affected by such factors as the nature of the
event causing the loss, the location of the loss and whether the losses are from policies in force
with primary insurers or reinsurers.
Excess of loss versus proportional
For excess of loss contracts, management is aided by the fact that each policy has a defined limit
of liability arising from one event. Once that limit has been reached, there is no further exposure
to additional losses from that policy for the same event. For proportional business, an initial
estimated loss and loss expense ratio is generally used. This is based upon information provided
by the ceding company and/or their broker and management\u2019s historical experience of that
treaty, if any, and the estimate is adjusted as actual experience becomes known.
b.
Market risk
Conduit is at risk of loss due to movements in market factors. The main market risks Conduit was
exposed to include:
\u2014
Reinsurance risk;
\u2014
Investment risk; and
\u2014
Currency risk.
Reinsurance risk
Conduit is exposed to reinsurance market risk from several sources, including the following:
\u2014
The advent or continuation of a soft market, which may result in a stabilisation or decline
in premium rates and/or terms and conditions for certain classes, or across all classes;
\u2014
The actions and reactions of key competitors, which may directly result in volatility in
premium volumes and rates, fee levels and other input costs;
\u2014
Market events, including unusual inflation in rates, may result in a limit in the availability of
cover, causing political intervention or national remedies;
\u2014
Failure to maintain broker and cedant relationships, leading to a limited or substandard choice
of risks inconsistent with Conduit\u2019s risk appetite;
\u2014
Changes in laws and regulation, including capital, governance or licensing requirements: and
\u2014
Changes in the geopolitical environment.
The most important method to mitigate reinsurance market risk is to maintain strict underwriting
standards. Conduit manages reinsurance market risk in numerous ways, including the following:
\u2014
Reviews and amends underwriting plans and outlook as necessary;
\u2014
Reduces exposure to, or withdraws from, market sectors where conditions have reached
unattractive levels;
\u2014
Purchases appropriate, cost-effective reinsurance cover to mitigate exposures:
\u2014
Closely monitors changes in rates, terms and conditions and inflation;
\u2014
Ensures through rigorous underwriting criteria that surplus capital does not drive short-term
risk appetite;
\u2014
An underwriting roundtable meeting, typically held daily, where deal flow, pricing and
opportunities are discussed;
\u2014
Holds quarterly management Underwriting Oversight Committee meetings that consider
matters that include underwriting performance for CRL;
\u2014
Holds an annual strategy review meeting;
\u2014
Holds a quarterly Underwriting Committee board meeting that considers matters including
underwriting performance for CRL;
\u2014
Holds a quarterly Risk, Capital and Compliance Committee meeting to review relevant risk and
capital considerations for CRL; and
\u2014
Holds regular meetings with regulators and rating agencies.
Reinsurance finance risk
Estimates of future cash flows for incurred claims are discounted on initial recognition and then
re-measured to current rates as at each reporting date. Reinsurance liabilities and ceded assets
for incurred claims are therefore sensitive to the level of market interest rates. Interest rate risk
on reinsurance contracts is the risk that the value of the future cash flows will fluctuate due to
changes in market interest rates. Movements in interest rates may lead to an adverse impact on
the value of Conduit\u2019s reinsurance contract assets and liabilities. Conduit manages this risk by
monitoring the duration of reinsurance contract cash flows and adopting policies regarding asset
and liability matching to reduce the volatility arising from interest rate movements on assets and
liabilities in the consolidated statement of comprehensive income (loss).
The total reinsurance contract assets and liabilities exposed to interest rate risk are detailed
below:
2023
2022
\"image\"
As at 31 December
Note
$m
$m
Ceded asset for incurred claims
14
42.6
58.5
Liability for incurred claims
14
(592.2)
(391.1)
Total
(549.6)
(332.6)
Discount rates
All future cash flows are discounted using yield curves that are adjusted to reflect the characteristics of the cash flows and the liquidity of the reinsurance contracts. Conduit determines its discount
rates using a bottom-up method of using a risk-free rate, plus an illiquidity premium where applicable. Risk-free rates are determined by reference to the yields published by EIOPA for the relevant,
material currencies. The illiquidity premium is estimated by reference to observable market corporate bond yields.
The annual spot rates, including illiquidity premium, used for the re-measurement of the net liability for incurred claims as at the balance sheet date are shown below for all portfolios:
2023
2022
As at 31 December
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
USD
5.26%
4.22%
4.00%
3.95%
5.57%
4.76%
4.45%
4.25%
EUR
3.86%
2.94%
2.82%
2.89%
3.68%
3.70%
3.63%
3.59%
GBP
5.24%
4.17%
3.86%
3.78%
4.96%
4.83%
4.56%
4.21%
The sensitivity of Conduit's net reinsurance liability for incurred claims to interest rate movements
is detailed below, assuming linear movements in interest rates:
2023
2022
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
17.4
3.2
10.7
3.2
75
13.1
2.4
8.1
2.4
50
8.7
1.6
5.4
1.6
25
4.4
0.8
2.7
0.8
0
-
-
-
-
-25
(4.4)
(0.8)
(2.7)
(0.8)
-50
(8.8)
(1.6)
(5.5)
(1.7)
-75
(13.3)
(2.4)
(8.2)
(2.5)
-100
(17.8)
(3.2)
(11.0)
(3.3)
Investment risk
Movements in investments resulting from changes in interest and inflation rates, credit spreads,
and currency exchange rates, among other factors, may lead to an adverse impact on the value
of Conduit\u2019s investment portfolio. Conduit seeks to invest in issuers with stronger ESG practices
on balance, as it believes that this will also help reduce risk in the portfolio.
The Investment Committee of the CRL Board is responsible for all investment-related decisions
and investment guidelines. The investment guidelines set the parameters within which Conduit\u2019s
external managers must operate. Important parameters of these guidelines include permissible
asset classes, duration ranges, credit quality, permitted currency, maturity, industry sectors,
geographical, sovereign and issuer exposures. Guideline compliance is monitored on a monthly
basis. The portfolio of fixed maturity securities is currently managed by four external managers.
Their performance is monitored on an ongoing basis. Conduit projects the level of funds required
to meet near-term obligations and cash flow needs following extreme events in order to ensure
adequate liquidity is maintained. Conduit also prioritises liquid asset classes with higher credit
quality and shorter duration so that Conduit can meet reinsurance and other near-term
obligations. Conduit has split the portfolio into a short-tail mandate, to better match the property
and specialty classes of business, and a long-tail mandate, to better match the casualty classes of
business and some aspects of the specialty classes of business. The short-tail mandate will be
slightly shorter duration than the long-tail mandate.
Conduit reviews the composition, duration and asset allocation of its investment portfolio on a
regular basis to respond to changes in interest rates and other market conditions. If certain asset
classes are anticipated to produce a higher return within management\u2019s risk tolerance, an
adjustment in asset allocation may be made. Conversely, if the risk profile is expected to move
outside of tolerance levels, adjustments may be made to reduce the risks in the portfolio.
Conduit models various periods of significant stress in order to better understand the investment
portfolio\u2019s risks and exposures. The scenarios represent what could, and most likely will, occur \u2013
albeit not in the exact form of the scenarios, which are based on historic periods of volatility.
Conduit also monitors the portfolio impact of more severe scenarios consisting of extreme shocks.
Conduit focuses on the most significant risks in its investment portfolio which are interest rate
risk, credit risk and liquidity risk, and has built stress testing and risk analytics around these risks
to ensure they are within tolerances and preferences.
Strategic asset allocation reviews will be undertaken periodically to assess Conduit\u2019s overall
investment strategy and to consider alternative asset allocations to achieve the best risk-adjusted
return within Conduit's risk appetite. Any resulting recommendations would be approved by the
appropriate management committee(s) and reported to the Board. The Investment Committee
meets quarterly to ensure that the strategic and tactical investment actions were consistent with
investment risk preferences, appetite, risk and return objectives and tolerances. The investment
risk tolerances have been incorporated into the risk framework.
The investment mix by mandate and sector of Conduit's portfolio of fixed maturity securities
is as follows:
Estimated
Estimated
Estimated
Estimated
Estimated
Estimated
fair value
fair value
fair value
fair value
fair value
fair value
short-tail
long-tail
total
short-tail
long-tail
total
As at 31 December 2023
$m
$m
$m
As at 31 December 2022
$m
$m
$m
Short-term investments
42.0
4.7
46.7
Short-term investments
33.2
4.7
37.9
US treasuries
230.0
113.9
343.9
US treasuries
103.6
106.6
210.2
US agency debt
2.0
1.8
3.8
US agency debt
-
1.8
1.8
US municipals
11.8
7.3
19.1
US municipals
10.0
5.2
15.2
Non-US government and agency
2.0
-
2.0
Non-US government and agency
2.0
-
2.0
Asset-backed
125.4
48.9
174.3
Asset-backed
102.6
61.2
163.8
US government agency mortgage-backed
62.3
59.8
122.1
US government agency mortgage-backed
52.7
47.9
100.6
Non-agency mortgage-backed
11.7
6.6
18.3
Non-agency mortgage-backed
9.8
3.0
12.8
Agency commercial mortgage-backed
7.8
-
7.8
Agency commercial mortgage-backed
3.2
-
3.2
Non-agency commercial mortgage-backed
25.6
31.2
56.8
Non-agency commercial mortgage-backed
21.9
30.8
52.7
Corporate
286.1
157.5
443.6
Corporate
263.6
157.9
421.5
Total
806.7
431.7
1,238.4
Total
602.6
419.1
1,021.7
Corporate and non-US government and agency bonds by country are as follows:
Non-US
Other
government
Financials
industries
and agency
Total
As at 31 December 2023
$m
$m
$m
$m
US
179.0
178.5
-
357.5
UK
22.9
1.6
-
24.5
Canada
16.1
0.9
-
17.0
Other countries
42.9
1.7
2.0
46.6
Total
260.9
182.7
2.0
445.6
Non-US
Other
government
Financials
industries
and agency
Total
As at 31 December 2022
$m
$m
$m
$m
US
140.6
187.7
-
328.3
UK
21.7
5.5
-
27.2
Canada
23.2
0.5
-
23.7
Other countries
35.4
6.9
2.0
44.3
Total
220.9
200.6
2.0
423.5
The sector allocation of corporate bonds is as follows:
2023
2022
As at 31 December
$m
%
$m
%
Financials
260.9
58.8
220.9
52.4
Industrials
161.4
36.4
180.3
42.8
Utilities
21.3
4.8
20.3
4.8
Total
443.6
100.0
421.5
100.0
Conduit\u2019s investment portfolio is comprised of fixed maturity securities and cash and cash
equivalents. Fair values can be impacted by movements in interest rates, credit ratings, exchange
rates, the current economic environment and outlook. The estimated fair value of the portfolio of
fixed maturity securities is generally inversely correlated to movements in market interest rates.
If market interest rates fall, the estimated fair value of Conduit\u2019s portfolio of fixed maturity
securities would tend to rise and vice versa. The sensitivity of the price of fixed maturity
securities to movements in interest rates is indicated by their duration. The greater a security\u2019s
duration, the greater its price volatility to movements in interest rates. The sensitivity of Conduit\u2019s
portfolio of fixed maturity securities to interest rate movements is detailed below, assuming linear
movements in interest rates.
2023
2022
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
(32.1)
(2.6)
(23.0)
(2.2)
75
(24.1)
(1.9)
(17.2)
(1.7)
50
(16.0)
(1.3)
(11.5)
(1.1)
25
(8.0)
(0.6)
(5.7)
(0.6)
0
-
-
-
-
-25
9.1
0.7
6.6
0.6
-50
18.3
1.5
13.2
1.3
-75
27.4
2.2
19.7
1.9
-100
36.5
2.9
26.3
2.6
Conduit mitigates interest rate risk on the investment portfolio by establishing and monitoring
duration ranges in its investment guidelines. The duration of the portfolio is matched to the
modelled expected duration of the reinsurance reserves, within a permitted range. The permitted
duration range for the portfolio is between 1.5 and 5 years. The overall duration for the fixed
maturity securities, managed cash and cash equivalents is 2.4 years as at 31 December 2023
(as at 31 December 2022: 2.2 years).
In addition to duration management, Conduit monitors VaR to measure potential losses in the
estimated fair values of its cash and invested assets and to understand and monitor risk. The VaR
calculation is performed using variance/covariance risk modelling. Securities are valued
individually using standard market pricing models. These security valuations serve as the input
to many risk analytics. The principal VaR measure that is produced is an annual VaR at the 99th
percentile confidence level. Under normal conditions, the portfolio is not expected to lose more
than the VaR metric listed below, 99% of the time over a one-year time horizon. The
appropriateness of this measure is considered by the Investment Committee periodically.
Conduit\u2019s annual VaR calculation is as follows:
Currency risk
Conduit is susceptible to fluctuations in rates of foreign exchange, principally between the US dollar and pound sterling and the US dollar and the euro. Even though risks are assumed on a worldwide
basis, they are predominantly denominated in US dollars. Conduit is exposed to currency risk to the extent its assets are denominated in different currencies to its liabilities. Conduit is also exposed to
translation risk on non-monetary assets and liabilities. Foreign currency gains and losses are recorded in the period they occur in the consolidated statement of comprehensive income (loss).
Conduit hedges monetary non-US dollar liabilities primarily with non-US dollar assets but may also use derivatives, such as currency forwards, to mitigate foreign currency exposures. The main
foreign currency exposure relates to its reinsurance and ceded reinsurance assets and liabilities, cash holdings and dividend payable, if applicable.
With the adoption of IFRS 17 all reinsurance and ceded reinsurance assets and liabilities are monetary items and are revalued at period end exchange rates.
The following table summarises the carrying value of all monetary and non-monetary assets and liabilities categorised by Conduit\u2019s main currencies. Prior periods have been restated for the adoption
of IFRS 17:
As at 31 December 2023
USD
$m
GBP
$m
EUR
$m
Other
$m
Total
$m
Total assets
1,427.9
26.3
16.5
25.5
1,496.2
Total liabilities
(438.7)
(20.4)
(29.3)
(20.4)
(508.8)
Net assets (liabilities)
989.2
5.9
(12.8)
5.1
987.4
As at 31 December 2022 (re-stated)
USD
$m
GBP
$m
EUR
Other
Total
$m
$m
$m
Total assets
1,192.9
10.5
4.2
7.0
1,214.6
Total liabilities
(303.3)
(8.9)
(22.4)
(12.8)
(347.4)
Net assets (liabilities)
889.6
1.6
(18.2)
(5.8)
867.2
The impact on profit from a proportional foreign exchange movement of 10.0% against the US dollar at year end spot rates would be an increase or decrease of $0.4 million (31 December 2022:
decrease or increase $1.3 million).
c.
Liquidity risk
Liquidity risk is the risk that cash may not be available to pay obligations when they are due
without incurring unreasonable costs. Conduit's main exposure to liquidity risk is with respect to
its reinsurance and investment activities. Conduit is exposed if proceeds from the sale of financial
assets are not sufficient to fund obligations arising from reinsurance contacts and/or other
liabilities. Conduit can be exposed to fund daily calls on its available investment assets, principally
to settle reinsurance claims and/or to fund trust accounts following a large catastrophe loss, or
other collateral requirements.
Liquidity risk exposures related to reinsurance activities are as follows:
\u2014
Large catastrophic events, or multiple medium-sized events in quick succession, requiring the
payment of high value claims within a short time frame or to fund trust accounts established
to collateralise claims payment liabilities;
\u2014
Failure of cedants to meet their contractual obligations with respect to the timely payment
of premiums; and
\u2014
Failure of Conduit\u2019s ceded reinsurers to meet their contractual obligations to pay claims
within a timely manner.
Liquidity risk exposures related to investment activities are as follows:
\u2014
Adverse market movements and/or a duration mismatch to obligations, resulting
in investments needing to be disposed of at a significant realised loss; and
\u2014
An inability to liquidate investments due to market conditions.
Conduit's investment strategy is to hold high quality, liquid securities sufficient to meet
reinsurance liabilities and other near-term liquidity requirements. Portfolios are specifically
designed to ensure funds are readily available in an extreme event.
The maturity dates of Conduit's portfolio of fixed maturity securities are as follows:
As at 31 December 2023
Short-tail
$m
Long-tail
$m
Total
$m
Fixed maturity securities at FVTPL
Less than one year
174.6
29.9
204.5
Between one and two years
135.3
13.1
148.4
Between two and three years
122.3
47.7
170.0
Between three and four years
29.3
21.5
50.8
Between four and five years
41.1
79.8
120.9
Over five years
71.3
93.2
164.5
Asset-backed and mortgage-backed
232.8
146.5
379.3
Total
806.7
431.7
1,238.4
As at 31 December 2022
Short-tail
$m
Long-tail
$m
Total
$m
Fixed maturity securities at FVTPL
Less than one year
167.9
46.0
213.9
Between one and two years
149.5
37.0
186.5
Between two and three years
54.2
12.5
66.7
Between three and four years
15.8
48.8
64.6
Between four and five years
4.9
21.0
25.9
Over five years
20.1
110.9
131.0
Asset-backed and mortgage-backed
190.2
142.9
333.1
Total
602.6
419.1
1,021.7
The estimated maturity profile of the reinsurance liability for incurred claims and financial liabilities of Conduit is as follows:
Years until liability becomes due \u2013 discounted
2023
2022
Carrying
Less than
One to
Three to
Carrying
Less than
One to
Three to
value
one
three
five
Over five
Total
value
one
three
five
Over five
Total
As at 31 December
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Reinsurance liability for incurred claims
592.2
158.0
231.4
117.3
85.5
592.2
391.1
109.9
160.0
66.1
55.1
391.1
Other reinsurance payables
12.0
12.0
-
-
-
12.0
16.2
16.2
-
-
-
16.2
Other payables
12.0
12.0
-
-
-
12.0
8.7
8.7
-
-
-
8.7
Lease liabilities
2.3
0.7
1.6
-
-
2.3
2.4
0.6
1.2
0.6
-
2.4
Total
618.5
182.7
233.0
117.3
85.5
618.5
418.4
135.4
161.2
66.7
55.1
418.4
Actual maturities of the above may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.
The estimation of the ultimate liability for incurred claims is complex and incorporates a significant amount of judgement. The timing of payments is also uncertain and cannot be predicted as simply
as for other financial liabilities. Actuarial and statistical techniques, past experience and management\u2019s judgement have been used to determine a likely settlement pattern.
As at 31 December 2023, cash and cash equivalents were $199.8 million (31 December 2022: $112.9 million). Conduit manages its liquidity risks via its investment strategy to hold high quality, liquid
securities, sufficient to meet its reinsurance liabilities and other near-term liquidity requirements. In addition, Conduit has established asset allocation and maturity parameters within the investment
guidelines such that the majority of the investments are in high quality assets which could be converted into cash promptly and at minimal expense. Conduit monitors market changes and outlook
and reallocates assets as it deems necessary.
As at 31 December 2023, Conduit considers it has more than adequate liquidity to pay its obligations as they fall due even if difficult investment market conditions were to prevail for a period of time.
As at 31 December 2023
Cash and cash
equivalents and fixed
maturity securities
$m
Ceded asset for
incurred claims
$m
AAA
434.2
-
AA+, AA, AA-
562.0
-
A+, A, A-
332.6
23.1
BBB+, BBB, BBB-
109.4
-
Other
-
19.5
Total
1,438.2
42.6
Cash and cash
equivalents and fixed
maturity securities
Ceded asset for
As at 31 December 2022
$m
incurred claims
AAA
651.4
-
AA+, AA, AA-
74.5
-
A+, A, A-
279.7
31.0
BBB+, BBB, BBB-
129.0
-
Other
-
27.5
Total
1,134.6
58.5
Total expected premium cash flows represents the premium, net of deductions, expected to be
received for past and future reinsurance coverage. The following table shows total expected
premium cash flows that are not yet due and those that are past due but not impaired, which
represents the exposure to credit risk on reinsurance contracts issued at the balance sheet date:
As at 31 December
2023
$m
2022
$m
(re-stated)
Not yet due
318.2
215.0
Less than 90 days past due
42.7
29.8
Over 90 days past due
7.0
3.4
Total
367.9
248.2
For the years ended 31 December 2023 and 2022 no provisions have been made for impaired
or irrecoverable balances and no amount was charged to the consolidated statement of
comprehensive income (loss) in respect of bad debts.
e.
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
personnel, systems or external events. During the reporting period, various operational risks were
identified, and steps were taken to manage or mitigate these risks.
The risk framework addresses the identification, assessment and management of operational
risks. This process involves the use of risk registers to identify inherent risk and residual risk after
the application of controls. The management of individual risks is the responsibility of
management, with independent challenge and oversight provided by the risk function. The results
of compliance reviews and independent internal audits provide an additional level of review and
verification. The Audit Committee has selected a reputable provider to serve as outsourced
internal auditors.
Strategic risk
Conduit has identified several strategic risks, including:
\u2014
The risks that either the poor execution of the business plan or an inappropriate business plan
in itself results in a strategy that fails to reflect adequately the trading environment, resulting
in an inability to optimise performance, including reputational risk;
\u2014
The risks of the failure to maintain adequate capital, accessing capital at an inflated cost or the
inability to access capital and unanticipated changes in vendor, regulatory and/or rating
agency models that could result in an increase in capital requirements or a change in the type
of capital required; and
\u2014
The risks of succession planning, staff retention and key personnel risks.
Business plan risk
Conduit's business plan forms the basis of operations and provides strategic direction to
management. Actual versus planned results are monitored regularly.
Capital management risk
The total tangible capital is as follows:
As at 31 December
2023
$m
2022
$m
(re-stated)
Shareholders' equity
987.4
867.2
Intangible assets
-
1.4
Total tangible capital
987.4
865.8
Risks associated with the effectiveness of Conduit\u2019s capital management are mitigated as follows:
\u2014
Regular monitoring of current and prospective regulatory and rating agency capital requirements;
\u2014
Oversight of capital requirements by the Board;
\u2014
Ability to purchase sufficient, cost-effective reinsurance;
\u2014
Maintaining contact with vendors, regulators and rating agencies in order to stay abreast
of upcoming developments; and
\u2014
Participation in industry groups such as the Association of Bermuda Insurers and Reinsurers,
Reinsurance Association of America and the International Underwriting Association.
Conduit reviews the level and composition of capital on an ongoing basis with a view of:
\u2014
Maintaining sufficient capital for underwriting opportunities and to meet obligations
to policyholders;
\u2014
Maximising the risk-adjusted return to shareholders within the context of the defined
risk appetite;
\u2014
Maintaining an adequate financial strength rating; and
\u2014
Meeting all relevant capital requirements.
Capital is increased or returned as appropriate. The retention of earnings generated leads to an
increase in capital. Capital raising can include debt or equity and returns of capital may be made
through dividends, share repurchases, a redemption of debt or any combination thereof. Other
capital management tools and products available to Conduit may also be utilised. All capital
actions require approval by the Board.
The primary source of capital used by Conduit is equity shareholders\u2019 funds. As a holding
company, CHL relies on dividends from its operating entity to provide the cash flow required
for dividends to shareholders. The ability of the operating entity to pay dividends and make
capital distributions is subject to the legal and regulatory restrictions of the jurisdiction in which it
operates.
CRL is regulated as a Class 4 (re)insurer by the BMA and is required to hold sufficient capital in
that under applicable regulations. BMA\u2019s regulatory framework, has been assessed as equivalent
to the EU\u2019s Solvency II regime. CRL had sufficient capital at all times throughout the year to meet
the BMA\u2019s requirements, inclusive of the BSCR standard formula and minimum margin of
solvency.
Retention risk
Risks associated with succession planning, staff retention and key man risks are mitigated
through a combination of resource planning processes and controls, including:
\u2014
The identification of key personnel with appropriate succession plans at CHL;
\u2014
The identification of key team profit generators at CRL and function heads with targeted
retention packages;
\u2014
Documented recruitment procedures, position descriptions and employment contracts;
\u2014
Resource monitoring and the provision of appropriate compensation, including equity-based
incentives which vests over a defined time horizon, subject to achieving certain performance
criteria; and
\u2014
Training schemes.
Year ended 31 December 2023
Property
$m
Casualty
$m
Specialty
$m
Total
$m
Reinsurance revenue by geographic region
US
198.0
118.3
20.6
336.9
Worldwide
101.2
23.4
74.7
199.3
Europe
21.7
28.2
19.7
69.6
Other
24.3
1.9
1.0
27.2
Reinsurance revenue
345.2
171.8
116.0
633.0
Year ended 31 December 2022
Property
$m
Casualty
$m
Specialty
$m
Total
$m
Reinsurance revenue by geographic region
US
109.8
104.0
3.9
217.7
Worldwide
56.5
14.9
51.4
122.8
Europe
15.7
16.2
7.0
38.9
Other
10.8
1.6
0.6
13.0
Reinsurance revenue
192.8
136.7
62.9
392.4
Management and the Board review Conduit\u2019s business and evaluates its performance primarily
by three segments: Property, Casualty and Specialty. These are considered to be the reportable
segments for the purposes of segmental reporting. Further classes of business are underwritten
within each reportable segment. The nature of these individual classes is discussed further in the
Risk disclosures section in note 3.
Property
US and international property catastrophe and non-catastrophe risks on an
excess of loss and proportional contract basis.
Casualty
US and international casualty risks principally including directors and officers
liability, financial institutions liability, general liability, medical malpractice,
professional liability and transactional liability.
Specialty
Diverse portfolio of business, including aviation, energy, engineering and
construction, environmental, marine, renewables, political violence and terrorism
and whole account.
\"image\"
Reportable segment performance is measured by the reinsurance service and finance result and
the combined ratio. The chief operating decision maker does not manage Conduit's assets by
reportable segment, and, accordingly, investment income and other non-underwriting related
items are not allocated to each reportable segment. Refer to the risk disclosures for more
information. All amounts reported are transactions with external parties and associates.
There are no significant inter-segmental transactions.
Included within the worldwide geographic region, are premiums written with external parties
in Bermuda for $4.0 million (31 December 2022: $0.6 million).
2023
2022
Property
Casualty
Specialty
Total
Property
Casualty
Specialty
Total
Year ended 31 December
$m
$m
$m
$m
$m
$m
$m
$m
Reinsurance revenue
345.2
171.8
116.0
633.0
192.8
136.7
62.9
392.4
Ceded reinsurance expenses
(66.9)
(1.3)
(8.5)
(76.7)
(40.5)
(1.2)
(6.9)
(48.6)
Net reinsurance revenue
278.3
170.5
107.5
556.3
152.3
135.5
56.0
343.8
Reinsurance losses and loss related amounts, discounted
(136.5)
(120.7)
(70.8)
(328.0)
(142.9)
(116.1)
(73.5)
(332.5)
Reinsurance operating expenses
(30.4)
(11.9)
(6.7)
(49.0)
(16.7)
(8.5)
(4.4)
(29.6)
Reinsurance service expenses
(166.9)
(132.6)
(77.5)
(377.0)
(159.6)
(124.6)
(77.9)
(362.1)
Ceded reinsurance recoveries
4.6
0.2
(0.5)
4.3
21.4
0.2
7.1
28.7
Reinsurance service result
116.0
38.1
29.5
183.6
14.1
11.1
(14.8)
10.4
Net reinsurance finance expense
(9.5)
(15.0)
(8.3)
(32.8)
2.5
13.8
4.5
20.8
Reinsurance service and finance result
106.5
23.1
21.2
150.8
16.6
24.9
(10.3)
31.2
Other operating expenses
(28.3)
(20.7)
Net unallocated revenue (expenses)
68.3
(54.4)
Total comprehensive income
190.8
(43.9)
Net loss ratio (discounted)
47.4%
70.7%
66.3%
58.2%
79.8%
85.5%
118.6%
88.4%
Reinsurance operating expense ratio
10.9%
7.0%
6.2%
8.8%
11.0%
6.3%
7.9%
8.6%
Other operating expense ratio
5.1%
6.0%
Combined ratio (discounted)
58.3%
77.7%
72.5%
72.1%
90.8%
91.8%
126.5%
103.0%
Net loss ratio (undiscounted)
51.5%
89.4%
77.1%
68.0%
83.0%
93.8%
128.8%
94.7%
Combined ratio (undiscounted)
62.4%
96.4%
83.3%
81.9%
94.0%
100.1%
136.7%
109.3%
5.
Investment return
Net
Net
Net
realised
unrealised
Total
investment
gains
gains
investment
income
(losses)
(losses)
return
As at 31 December 2023
$m
$m
$m
$m
Fixed maturity securities
35.7
(1.3)
30.6
65.0
Cash and cash equivalents
5.6
-
-
5.6
Total
41.3
(1.3)
30.6
70.6
Net
Net
Net
realised
unrealised
Total
investment
gains
gains
investment
income
(losses)
(losses)
return
As at 31 December 2022
$m
$m
$m
$m
Fixed maturity securities
16.5
(2.8)
(67.8)
(54.1)
Cash and cash equivalents
1.3
-
-
1.3
Total
17.8
(2.8)
(67.8)
(52.8)
Included in net investment income is $1.3 million of investment management and custody fees for the year ended
31 December 2023 (31 December 2022: $1.1 million). Net foreign exchange gains (losses) on cash and cash
equivalents and fixed maturity securities for the year ended 31 December 2023 was nil (31 December 2022: $0.1
million loss). Foreign exchange impacts are not included in the investment returns in the table above.
Reinsurance finance return
2023
2022
Year ended 31 December
$m
$m
Interest accretion from reinsurance contracts
(28.9)
(7.3)
Interest accretion from ceded reinsurance contracts held
2.9
1.2
Net interest accretion
(26.0)
(6.1)
Change in discount rates from reinsurance contracts
(7.2)
29.3
Change in discount rates from ceded reinsurance contracts held
0.4
(2.4)
Net change in discount rates
(6.8)
26.9
Net reinsurance finance income (expense)
(32.8)
20.8
7.
Employee benefits and other incentives
Aggregate remuneration and other incentives of Conduit\u2019s employees is as follows:
2023
2022
Year ended 31 December
$m
$m
Wages and salaries
13.0
11.4
Pension benefit
1.3
1.1
Bonus and other benefits
15.0
7.7
Total cash compensation
29.3
20.2
Equity-based incentives
2.5
2.1
Total employee benefits and other incentives
31.8
22.3
Equity-based incentives \u2013 MIP
Prior to the IPO, a MIP was created. The purpose of the MIP was to provide an incentive
scheme for the founders and initial employees for their services in establishing the
foundations of Conduit. The incentive is based around shares in CML, which will be
automatically exchanged for ordinary shares of CHL for an aggregate value equivalent to up to
15% of the excess of the market value of CHL over and above the Invested Equity, subject to
the satisfaction of the vesting conditions. All outstanding and future grants have an exercise
period of four to seven years from the grant date. The fair value is estimated using a
stochastic Monte Carlo model.
CML issued 100,000 A1 shares and 100,000 A2 shares during the period ended 31 December 2020
at a subscription price of \u00a31.72 and $2.26, respectively. Refer to note 17 for additional details.
The following table lists the assumptions used in the stochastic model for the MIP awards:
Assumptions
Dividend yield
0%
Expected volatility1
range from
17.2% \u2013 19.0%
Risk-free interest rate2
range from
0.3% \u2013 0.6%
Expected life of instruments
range from
4 to 7 years
1.
The expected volatility was calculated based on a comparator group of companies.
2.
The risk-free interest rate is based on the yield of a US government bond on the date of grant.
The shares were granted prior to the IPO and therefore discounts for business viability and
lack of marketability were also applied. There are significant risks associated with an IPO and
the instruments are also illiquid until the tranche vesting dates. Management therefore selected
their best estimates at the time for these discounts. These assumptions were highly
judgemental and input from advisers was sought. Management also considered alternative
assumptions and concluded there was not a material impact on the estimated valuation
selected. The calculation of the equity-based incentive expense assumes no forfeitures due
to employee turnover, with subsequent adjustments to reflect actual experience. The
assumptions and estimated valuation selected resulted in 20% being expensed upfront for
certain employees as this portion was not tied to service conditions and was fully expensed in
the period ended 31 December 2020.
Conditions of the MIP include:
\u2014
The incentives are to be equity-settled and have therefore been accounted for in
accordance with IFRS 2;
\u2014
The value of the services received in exchange for the share-based incentives is measured
by reference to the estimated fair value of the incentives at their grant date, with the
estimated fair value recognised in the consolidated statement of comprehensive income
(loss), together with a corresponding increase in other reserves within shareholders\u2019 equity,
on a straight-line basis over the vesting period, based on an estimate of the number of
shares that will ultimately vest;
\u2014
Vesting conditions, other than market conditions linked to the share price of CHL, are not
taken into account when estimating the fair value; and
\u2014
At the end of each reporting period Conduit revises its estimates of the number of shares that
are expected to vest due to non-market conditions and recognises the impact of the revision to
original estimates, if any, in the consolidated statement of comprehensive income (loss), with
a corresponding adjustment to shareholders\u2019 equity.
Equity-based incentives \u2013 DSBP
A percentage of each employee's bonus is automatically deferred into shares as nil cost options.
The nil cost options vest annually in separate equal tranches over a three year period from the
date of grant and do not have associated performance criteria attached to the awards. These
awards accrue dividend equivalents for all dividends declared where the record date falls
between the grant date and date of exercise, and are paid at the time of exercise.
Number of
DSBP
awards
Outstanding as at 31 December 2021
-
Granted
764,575
Exercised
-
Forfeited
(11,559)
Outstanding as at 31 December 2022
753,016
Granted
315,875
Exercised
(250,963)
Forfeited
(35,236)
Outstanding as at 31 December 2023
782,692
Equity-based incentives \u2013 LTIP
The LTIP is a retention scheme with awards granted to staff members as nil cost options. The nil
cost options vest over a three year period from the date of grant and do not have associated
performance criteria attached to the awards. These awards accrue dividend equivalents for all
Number of
LTIP
awards
Outstanding as at 31 December 2022
-
Granted
365,984
Exercised
-
Forfeited
-
Outstanding as at 31 December 2023
365,984
8. Other operating expenses
Year ended 31 December
2023
$m
2022
$m
Other operating expenses include:
Audit fees
1.3
0.9
Other auditor services
0.1
0.1
Total
1.4
1.0
dividends declared where the reco
During the year ended 31 December 2023, KPMG Audit Limited provided non-audit services in relation to
Conduit's 2023 interim review and carbon emission disclosures. Fees for non-audit services in the year
ended 31 December 2023 totalled $0.1 million (31 December 2022: $0.1 million).
9. Financing costs
2023
2022
Year ended 31 December
$m
$m
LOC and trust fees
1.1
0.7
Interest expense on lease liabilities
0.1
0.1
Total
1.2
0.8
Refer to note 16 for details of Conduit\u2019s financing arrangements.
10. Tax
Bermuda
CHL, CSL, CML and CRL have received an undertaking from the Bermuda government which
exempts them from all Bermuda local income, withholding and capital gains taxes until 31 March
2035. On 27 December 2023 the Bermuda government enacted legislation, the Bermuda
Corporate Income Tax Act of 2023, into law which may supersede such exemptions. CHL, CSL,
CML and CRL are currently not in scope for this new legislation and as such, the exemptions
provided by the Bermuda government undertaking still apply.
United Kingdom
CRSL is subject to normal UK corporation tax on all of its taxable profits. For the years ended 31
December 2023 and 2022 an immaterial tax profit arose and Conduit has therefore not recognised
a deferred tax asset.
11. Cash and cash equivalents
2023
2022
As at 31 December
$m
$m
Cash at bank and in hand
39.4
21.5
Cash equivalents
160.4
91.4
Total
199.8
112.9
Cash equivalents include money market funds and other short-term highly liquid investments
with three months or less remaining until maturity at the time of purchase. The carrying amount
of these assets approximates their fair value. Refer to note 16 for cash and cash equivalents
provided as collateral under Conduit\u2019s financing arrangements.
12. Investments
Cost or
amortised
Unrealised
Unrealised
Estimated
Cost or
amortised
Unrealised
Unrealised
Estimated
cost
gains
losses
fair value
cost
gains
losses
fair value
As at 31 December 2023
$m
$m
$m
$m
As at 31 December 2022
$m
$m
$m
$m
Fixed maturity securities, at FVTPL
Fixed maturity securities, at FVTPL
Short-term investments
46.7
-
-
46.7
Short-term investments
37.9
-
-
37.9
US treasuries
351.0
2.1
(9.2)
343.9
US treasuries
221.6
0.2
(11.6)
210.2
US agency debt
4.0
-
(0.2)
3.8
US agency debt
2.0
-
(0.2)
1.8
US municipals
19.5
0.3
(0.7)
19.1
US municipals
16.4
-
(1.2)
15.2
Non-US government and agency
2.0
-
-
2.0
Non-US government and agency
2.1
-
(0.1)
2.0
Asset-backed
177.3
0.3
(3.3)
174.3
Asset-backed
171.6
-
(7.8)
163.8
US government agency mortgage-
backed
135.9
0.7
(14.5)
122.1
US government agency mortgage-
backed
116.3
0.1
(15.8)
100.6
Non-agency mortgage-backed
20.0
0.1
(1.8)
18.3
Non-agency mortgage-backed
15.1
-
(2.3)
12.8
Agency commercial mortgage-backed
8.1
0.1
(0.4)
7.8
Agency commercial mortgage-backed
3.7
-
(0.5)
3.2
Non-agency commercial mortgage-
62.7
0.2
(6.1)
56.8
Non-agency commercial mortgage-
59.7
-
(7.0)
52.7
backed
backed
Corporate
456.0
2.5
(14.9)
443.6
Corporate
450.7
0.1
(29.3)
421.5
Total
1,283.2
6.3
(51.1)
1,238.4
Total
1,097.1
0.4
(75.8)
1,021.7
As at 31 December 2023 other assets and other payabl es incl uded $0.1 million and nil for investments sold
and purchased, respectively (31 December 2022: $1.2 million and $1.2 million, respectively).
Conduit determines the estimated fair value of each individual security utilising the highest-level inputs
available. Prices for the investment portfolio are provided via a third-party investment accounting firm whose
pricing processes and the controls thereon are subject to an annual audit on both the operation and the
effectiveness of those controls. Various recognised reputable
pricing sources are used including pricing vendors. The pricing sources use bid prices where
available, otherwise indicative prices are quoted based on observable market trade data. The
prices provided are compared to the investment managers\u2019 pricing.
Conduit has not made any adjustments to any pricing provided by independent pricing services
or its third-party investment managers for the years ended 31 December 2023 and 2022. The fair
value of securities in the investment portfolio is estimated using the following techniques:
LEVEL (I) \u2013 Level (I) investments are securities with quoted prices in active markets. A financial
instrument is regarded as quoted in an active market if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service or regulatory agency
and those prices represent actual and regularly occurring market transactions on an arm\u2019s
length basis.
LEVEL (II) \u2013 Level (II) investments are securities with quoted prices in active markets for similar
assets or liabilities or securities valued using other valuation techniques for which all significant
inputs are based on observable market data. Instruments included in Level (II) are valued via
independent external sources using directly observable inputs to models or other valuation
methods. The valuation methods used are typically industry accepted standards and include
broker-dealer quotes and pricing models including present values and future cash flows with
inputs such as yield curves, credit spreads, interest rates, prepayment speeds and default rates.
LEVEL (III) \u2013 Level (III) investments are securities for which valuation techniques are not based
on observable market data and require significant management judgement.
Conduit determines whether transfers have occurred between levels of the fair value hierarchy by
re-assessing the categorisation at the end of each reporting period. Transfers from Level (I) to (II)
securities amounted to $9.4 million and transfers from Level (II) to (I) securities amounted to
$63.4 million during the year ended 31 December 2023 using end of current period positions and
estimated fair values. Transfers from Level (I) to (II) securities amounted to $76.2 million and
transfers from Level (II) to (I) securities amounted to $37.8 million during the year ended 31
December 2022 using end of current period positions and estimated fair values. There were
no investments included in Level (III) for either year end.
The fair value hierarchy of Conduit's investment portfolio is as follows:
As at 31 December 2023
Level I
$m
Level II
$m
Total
$m
Fixed maturity securities, at FVTPL
Short-term investments
46.1
0.6
46.7
US treasuries
343.9
-
343.9
US agency debt
-
3.8
3.8
US municipals
-
19.1
19.1
Non-US government and agency
-
2.0
2.0
Asset-backed
-
174.3
174.3
US government agency mortgage-backed
-
122.1
122.1
Non-agency mortgage-backed
-
18.3
18.3
Agency commercial mortgage-backed
-
7.8
7.8
Non-agency commercial mortgage-backed
-
56.8
56.8
Corporate
93.6
350.0
443.6
Total
483.6
754.8
1,238.4
Level I
Level II
Total
As at 31 December 2022
$m
$m
$m
Fixed maturity securities, at FVTPL
Short-term investments
37.9
-
37.9
US treasuries
210.2
-
210.2
US agency debt
-
1.8
1.8
US municipals
-
15.2
15.2
Non-US government and agency
-
2.0
2.0
Asset-backed
-
163.8
163.8
US government agency mortgage-backed
-
100.6
100.6
Non-agency mortgage-backed
-
12.8
12.8
Agency commercial mortgage-backed
-
3.2
3.2
Non-agency commercial mortgage-backed
-
52.7
52.7
Corporate
51.3
370.2
421.5
Total
299.4
722.3
1,021.7
Refer to note 16 for investments provided as collateral under Conduit\u2019s financing arrangements.
13.
Interests in structured entities
Unconsolidated structured entities in which Conduit has an interest
As part of Conduit\u2019s investment activities, it invests in unconsolidated structured entities. Conduit
does not sponsor any of the unconsolidated structured entities. The business relations of Conduit
with the structured entities set out below do not give rise to consolidation because the criteria
for control pursuant to IFRS 10, as contained in our consolidation principles, are not met.
A summary of interests in unconsolidated structured entities is as follows:
2023
2022
As at 31 December
$m
$m
Fixed maturity securities, at FVTPL
Asset-backed
174.3
163.8
US government agency mortgage-backed
122.1
100.6
Non-agency mortgage-backed
18.3
12.8
Agency commercial mortgage-backed
7.8
3.2
Non-agency commercial mortgage-backed
56.8
52.7
Total
379.3
333.1
The fixed maturity structured entities are used to meet specific investment needs of borrowers
and investors which cannot be met from standardised financial instruments available in the
capital markets, providing liquidity and diversification. While individual securities may differin
structure, the principles of the instruments are similar and it is appropriate to aggregate the
investments into the categories detailed above.
The risk that Conduit faces in respect of the investments in structured entities is similar to the risk
it faces in respect of other financial investments held on the consolidated balance sheet. Fair
value is determined by market supply and demand, which is driven by investor evaluation of the
credit risk of the structure and changes in the term structure of interest rates which can change
the expectation of cash flows associated with the instrument and, therefore, its value in the
market.
The maximum exposure to loss in respect of these structured entities would be the carrying
value of the instruments that Conduit holds. Generally, default rates would have to increase
substantially before Conduit would suffer a loss. This assessment is made prior to investing and
regularly through the holding period for the security.
Refer to note 16 for investments provided as collateral under Conduit\u2019s financing arrangements.
14.
Reinsurance contracts
The breakdown of portfolios of reinsurance contracts issued and reinsurance contracts held, that
are in an asset position and those in a liability position and by type of reinsurance asset or
liability, is set out below.
The reconciliation from the opening to the closing balances of the liability for remaining coverage
and the liability for incurred claims for reinsurance contracts issued and ceded reinsurance
contracts held is shown below. The reconciliation shows the movement in the liability by the
reinsurance service result, total comprehensive income (loss) and cash flows separately for
reinsurance contracts issued and ceded reinsurance contracts held.
31 December
1 January
31 December
2022
2022
2023
$m
$m
As at
$m
(re-stated)
(re-stated)
Reinsurance contract liabilities
(494.5)
(336.3)
(116.1)
Liability for remaining coverage
109.7
71.0
49.1
Liability for incurred claims
(592.2)
(391.1)
(162.8)
Other reinsurance receivables (payables)
(12.0)
(16.2)
(2.4)
Reinsurance net asset (liability)
(494.5)
(336.3)
(116.1)
Ceded reinsurance contract assets
42.7
67.3
41.0
Ceded asset (liability) for remaining coverage
(1.2)
(3.7)
(2.5)
Ceded asset for incurred claims
42.6
58.5
43.5
Ceded other receivables (payables)
1.3
12.5
-
Ceded reinsurance net asset (liability)
42.7
67.3
41.0
Remaining
2023
2022
Remaining
coverage
Incurred claims
coverage
Incurred claims
Year ended 31 December ($m)
Excluding loss
component
Present value
of future cash
flows
Risk
adjustment
Total
Excluding loss
component
Present value
of future cash
flows
Risk
adjustment
Total
Opening reinsurance asset (liability)
71.0
(365.8)
(25.3)
(320.1)
49.1
(154.4)
(8.4)
(113.7)
Reinsurance revenue
633.0
-
-
633.0
392.4
-
-
392.4
Reinsurance service expenses
Incurred claims and other expenses
-
(311.9)
(27.1)
(339.0)
-
(324.4)
(21.0)
(345.4)
Amortisation of reinsurance acquisition expense cash flows
(37.6)
-
-
(37.6)
(22.9)
-
-
(22.9)
Changes to liabilities for incurred claims for past service
-
(5.9)
5.5
(0.4)
-
4.2
2.0
6.2
Reinsurance service expenses
(37.6)
(317.8)
(21.6)
(377.0)
(22.9)
(320.2)
(19.0)
(362.1)
Reinsurance service result
595.4
(317.8)
(21.6)
256.0
369.5
(320.2)
(19.0)
30.3
Reinsurance finance income (expense)
-
(33.2)
(2.9)
(36.1)
-
19.9
2.1
22.0
Effect of exchange rates
0.1
(1.3)
(0.1)
(1.3)
0.3
1.0
-
1.3
Total changes in comprehensive income (loss)
595.5
(352.3)
(24.6)
218.6
369.8
(299.3)
(16.9)
53.6
Investment components
20.1
(20.1)
-
-
13.7
(13.7)
-
-
Cash flows
Premiums received
(595.5)
-
-
(595.5)
(376.5)
-
-
(376.5)
Claims and other attributable expenses paid
-
195.9
-
195.9
-
101.6
-
101.6
Reinsurance acquisition expense cash flows
18.6
-
-
18.6
14.9
-
-
14.9
Total cash flows
(576.9)
195.9
-
(381.0)
(361.6)
101.6
-
(260.0)
Closing reinsurance asset (liability)
109.7
(542.3)
(49.9)
(482.5)
71.0
(365.8)
(25.3)
(320.1)
Remaining
2023
2022
Remaining
coverage
Incurred claims
coverage
Incurred claims
Year ended 31 December ($m)
Excluding loss
component
recovery
Present value
of future cash
flows
Risk
adjustment
Total
Excluding loss
component
recovery
Present value of
future cash
flows
Risk adjustment
Total
Opening ceded reinsurance asset (liability)
(3.7)
58.5
-
54.8
(2.5)
43.5
-
41.0
Ceded reinsurance expenses
Ceded reinsurance recoveries
Amounts recoverable on incurred claims
(76.7)
-
-
-
-
-
(76.7)
-
(48.6)
-
-
28.0
-
-
(48.6)
28.0
Changes to amounts recoverable for incurred claims
-
4.3
-
4.3
-
0.7
-
0.7
Ceded reinsurance recoveries
-
4.3
-
4.3
-
28.7
-
28.7
Reinsurance service result
(76.7)
4.3
-
(72.4)
(48.6)
28.7
-
(19.9)
Ceded reinsurance finance income (expense)
-
3.3
-
3.3
-
(1.2)
-
(1.2)
Effect of exchange rates
-
-
-
-
-
-
-
-
Total changes in comprehensive income (loss)
(76.7)
7.6
-
(69.1)
(48.6)
27.5
-
(21.1)
Investment components
-
-
-
-
-
-
-
-
Cash flows
Premiums paid
79.2
-
-
79.2
47.4
-
-
47.4
Recoveries received
-
(23.5)
-
(23.5)
-
(12.5)
-
(12.5)
Total cash flows
79.2
(23.5)
-
55.7
47.4
(12.5)
-
34.9
Closing ceded reinsurance asset (liability)
(1.2)
42.6
-
41.4
(3.7)
58.5
-
54.8
Remaining
2023
2022
Remaining
coverage
Incurred claims
Present value
coverage
Incurred claims
Present value of
Year ended 31 December ($m)
Excluding loss
component
of future cash
flows
Risk
adjustment
Total
Excluding loss
component
future cash
flows Risk adjustment
Total
Opening net reinsurance asset (liability)
67.3
(307.3)
(25.3)
(265.3)
46.6
(110.9)
(8.4)
(72.7)
Net reinsurance revenue
Net reinsurance service expenses
Net incurred claims and other expenses
556.3
-
-
(311.9)
-
(27.1)
556.3
-
(339.0)
343.8
-
-
(296.4)
-
(21.0)
343.8
-
(317.4)
Amortisation of reinsurance acquisition expense cash flows
(37.6)
-
-
(37.6)
(22.9)
-
-
(22.9)
Changes to net liabilities for incurred claims for past service
-
(1.6)
5.5
3.9
-
4.9
2.0
6.9
Net reinsurance service expenses
(37.6)
(313.5)
(21.6)
(372.7)
(22.9)
(291.5)
(19.0)
(333.4)
Reinsurance service result
518.7
(313.5)
(21.6)
183.6
320.9
(291.5)
(19.0)
10.4
Net reinsurance finance income (expense)
-
(29.9)
(2.9)
(32.8)
-
18.7
2.1
20.8
Effect of exchange rates
0.1
(1.3)
(0.1)
(1.3)
0.3
1.0
-
1.3
Total changes in comprehensive income (loss)
518.8
(344.7)
(24.6)
149.5
321.2
(271.8)
(16.9)
32.5
Investment components
20.1
(20.1)
-
-
13.7
(13.7)
-
-
Cash flows
Net premiums received
(516.3)
-
-
(516.3)
(329.1)
-
-
(329.1)
Net claims and other attributable expenses paid
-
172.4
-
172.4
-
89.1
-
89.1
Reinsurance acquisition expense cash flows
18.6
-
-
18.6
14.9
-
-
14.9
Total cash flows
(497.7)
172.4
-
(325.3)
(314.2)
89.1
-
(225.1)
Closing net reinsurance asset (liability)
108.5
(499.7)
(49.9)
(441.1)
67.3
(307.3)
(25.3)
(265.3)
Conduit did not book any additional case reserves for the years ended 31 December 2023 and
2022. The net liability for incurred claims as at 31 December 2023 had an estimated duration of
3.1 years (31 December 2022: 3.1 years).
The liability established by Conduit is viewed as adequate, however a 20% increase in estimated
undiscounted losses would have a $133.9 million adverse impact on comprehensive income (loss)
(31 December 2022: $91.9 million).
Despite an active period for natural catastrophe losses for the industry, there were no major
event losses individually or in aggregate which had a material impact on Conduit during 2023.
During 2022 the most significant loss events impacting Conduit were the Ukraine war and
Hurricane Ian. The estimated undiscounted ultimate net impact, after ceded reinsurance and
reinstatement premiums, is $24.6 million and $39.7 million respectively. Our undiscounted
ultimate loss estimates, net of ceded reinsurance and reinstatement premiums, for previously
reported loss events remain stable. During the year ended 31 December 2023 the changes in the
discounted net liability for incurred claims for prior accident years was a reduction of $3.9 million
(31 December 2022: $6.9 million).
Claims development table
The following tables show the estimates of cumulative undiscounted incurred claims, including the risk adjustment, for each successive accident year at each reporting date, together with the
cumulative payments to date:
Gross undiscounted claims, including risk adjustment
$m
$m
$m
$m
Accident year
2021
2022
2023
Total
At end of accident year
190.7
391.2
401.3
One year later
184.7
387.2
Two years later
187.5
Current estimate of undiscounted incurred claims
187.5
387.2
401.3
976.0
Cumulative payments to date
(112.8)
(135.7)
(58.0)
(306.5)
Current estimate of undiscounted liability for incurred claims
74.7
251.5
343.3
669.5
Effect of discounting
(74.3)
Current estimate of discounted liability for incurred claims
595.2
Ceded undiscounted recoveries, including risk adjustment
$m
$m
$m
$m
Accident year
2021
2022
2023
Total
At end of accident year
(48.9)
(39.0)
-
One year later
(50.1)
(36.9)
Two years later
(57.3)
Current estimate of ceded undiscounted incurred recoveries
(57.3)
(36.9)
-
(94.2)
Cumulative recoveries received to date
38.0
-
-
38.0
Current estimate of ceded undiscounted asset for incurred claims
(19.3)
(36.9)
-
(56.2)
Effect of discounting
4.7
Current estimate of ceded asset for incurred claims
(51.5)
Net undiscounted claims, including risk adjustment
$m
$m
$m
$m
Accident year
2021
2022
2023
Total
At end of accident year
141.8
352.2
401.3
One year later
134.6
350.3
Two years later
130.2
Current estimate of net undiscounted incurred claims
130.2
350.3
401.3
881.8
Cumulative payments to date
(74.8)
(135.7)
(58.0)
(268.5)
Current estimate of net undiscounted liability for incurred claims
55.4
214.6
343.3
613.3
Effect of discounting
(69.6)
Current estimate of net liability for incurred claims
543.7
A reconciliation of the net liability for incurred claims per the claims development tables to the carrying amounts included in the balance sheet has been provided below. Loss related amounts
represent amounts due that are contingent on claims, such as reinstatement premiums and profit commissions.
Reconciliation to carrying amounts:
2023
2022
Gross
Ceded
Net
Gross
Ceded
Net
As at 31 December
$m
$m
$m
$m
$m
$m
Undiscounted liability for incurred claims per claims development tables
669.5
(56.2)
613.3
459.3
(76.6)
382.7
Discount
(74.3)
4.7
(69.6)
(54.9)
7.4
(47.5)
Liability for incurred claims per claims development tables
595.2
(51.5)
543.7
404.4
(69.2)
335.2
Other loss related amounts
(3.0)
8.9
5.9
(13.3)
10.7
(2.6)
Liability (asset) for incurred claims
592.2
(42.6)
549.6
391.1
(58.5)
332.6
The estimation of the ultimate fulfilment cash flows for claims is a complex process which incorporates a significant amount of judgement. It is reasonably possible that uncertainties inherent in the
reserving process, delays in insureds or ceding companies reporting losses to Conduit, together with the potential for unforeseen adverse developments, could lead to a material change in estimated
liability for incurred claims. Further information on the calculation of the liability for incurred claims and associated risks are provided in the risk disclosures in note 3.
Amounts recognised in the consolidated financial statements
Year ended 31 December
2023
$m
2022
$m
Consolidated statement of comprehensive income (loss)
Interest expense on lease liabilities
0.1
0.1
Depreciation of right-of-use assets
0.6
0.7
Total
0.7
0.8
Consolidated statement of cash flows
Lease payments
0.7
0.6
15.
Right-of-use lease assets
Right-of-use lease assets primarily relate to leased properties for Conduit's offices in Bermuda
and office equipment.
Right-of-use assets
$m
Balance and net book value as at 31 December 2021
2.9
Depreciation
(0.7)
Balance and net book value as at 31 December 2022
2.2
Additions
0.5
Depreciation
(0.6)
Balance and net book value as at 31 December 2023
2.1
Lease liabilities
As at 31 December
2023
$m
2022
$m
Less than one year
0.8
0.6
Between one and five years
1.6
2.0
Total undiscounted lease liabilities
2.4
2.6
The discounted lease liability as at 31 December 2023 was $2.3 million (31 December 2022:
$2.4 million). Conduit does not face significant liquidity risk with respect to its lease liabilities.
16.
Financing arrangements
Letters of credit and trust accounts
CRL is a non-admitted reinsurer in the US and Canada although during the year received
reciprocal jurisdiction reinsurer status in certain states of the US (RJR). Subject to certain
exceptions, RJR status reduces the need for CRL to post collateral to support cedants in states
where CRL has RJR status. However, terms and conditions of certain reinsurance contracts with
US and Canadian cedants require CRL to provide collateral for outstanding insurance contract
liabilities, including the liability for remaining coverage and liability for incurred claims. The
collateral can be provided by LOCs or by assets in trust accounts. Refer to note 9 for details of
interest expense associated with these LOCs included in financing costs. Additional information
about Conduit's exposure to interest rate and liquidity risk is included in the risk disclosures
section in note 3.
Standby letter of credit facility
During July 2021, CRL, as the borrower, entered into a $125.0 million standby letter of credit
facility led by Lloyds Bank Corporate Markets PLC. CHL will guarantee the obligations of CRL
with respect to the standby letter of credit facility. Terms of the standby letter of credit facility
contain standard qualitative representations and require certain standard financial covenants be
adhered to, including: a maximum consolidated debt to capital ratio of CHL of 35.0%; a minimum
consolidated tangible net worth of CHL; and a minimum A.M. Best rating of B++ for CRL. CRL
increased the aggregate amount of the commitment under the facility up to $150.0 million during
2022, with an additional $25.0 million increase concluded during 2023 increasing the facility to
$175.0 million. As at 31 December 2023, $125.3 million (31 December 2022: $92.0 million) was
outstanding under the standby letter of credit facility and is secured by cash and cash
equivalents and investments of $153.2 million (31 December 2022: $110.7 million).
Uncommitted letter of credit facility
During September 2021, CRL entered into a $75.0 million uncommitted letter of credit facility
with Citibank Europe PLC which was increased to $125.0 million during 2023. Terms of the
uncommitted letter of credit facility include standard qualitative representations. As at 31
December 2023, $72.9 million (31 December 2022: $37.0 million) was outstanding under the
uncommitted letter of credit facility and is secured by cash and cash equivalents and investments
of $89.1 million (31 December 2022: $49.7 million).
Trust accounts
Several trust account arrangements have been established in favour of policyholders and ceding
companies to provide collateral or comply with the security requirements of certain contracts.
As at 31 December 2023, $170.8 million (31 December 2022: $127.4 million) of cash and cash
equivalents and investments were restricted in favour of third parties.
Additional letter of credit and trust funding requirements
For the year ended 31 December 2023, $18.2 million (31 December 2022: $87.8 million) of
collateral requests and collateral amendments in respect of that financial year were received
subsequent to the year end date. These collateral requests will be completed in the normal
course of business and will be funded during the subsequent year using cash and cash
equivalents and/or investments.
17. Share capital
Authorised share capital
Number
$m
Authorised common shares of $0.01 each
10,000,000,000
100.0
Authorised A1 shares of \u00a30.01 each
100,000
-
Authorised A2 shares of $0.01 each
100,000
-
As at 31 December 2023 and 2022
10,000,200,000
100.0
Common
shares
A1 shares
A2 shares
Total
Total
Allotted, called-up and fully paid
number
number
number
number
$m
Issued
165,239,997
100,000
100,000
165,439,997
1.7
As at 31 December 2023 and 2022
165,239,997
100,000
100,000
165,439,997
1.7
The number of common shares in issue less own shares held as at 31 December 2023 was 158,056,137 (31 December 2022: 160,141,174).
CHL holds 18,000 A1 and A2 shares at 31 December 2023 and 2022. The A1 and A2 shares issued by CML have no voting rights attached. Subject to vesting conditions, discussed in note 7, the A1 and
A2 shares will be automatically exchanged for ordinary shares of CHL.
Own shares
Own shares
Number held
in treasury
$m
Number held
in trust
$m
Total number
of own shares
Total
$m
As at 31 December 2021
(32,823)
(0.2)
-
-
(32,823)
(0.2)
Repurchased
(725,000)
(3.4)
-
-
(725,000)
(3.4)
Purchased by EBT
-
-
(4,341,000)
(16.5)
(4,341,000)
(16.5)
As at 31 December 2022
(757,823)
(3.6)
(4,341,000)
(16.5)
(5,098,823)
(20.1)
Purchased by EBT
-
-
(2,336,000)
(13.7)
(2,336,000)
(13.7)
Transferred to EBT
757,823
3.6
(757,823)
(3.6)
-
-
Distributed by EBT
-
-
250,963
0.9
250,963
0.9
As at 31 December 2023
-
-
(7,183,860)
(32.9)
(7,183,860)
(32.9)
Shares repurchased by CHL and the EBT will be held as own shares to meet future obligations under CHL\u2019s variable incentive schemes. See note 21 for information on shares held by the EBT.
Dividends
Record date
Payment date
Per share $
$m
Final 2021
25 March 2022
22 April 2022
0.18
29.7
Interim 2022
19 August 2022
9 September 2022
0.18
29.6
Final 2022
24 March 2023
21 April 2023
0.18
29.6
Interim 2023
18 August 2023
8 September 2023
0.18
29.7
See note 23 for information with respect to dividends declared subsequent to 31 December 2023.
18. Other reserves
Other reserves consist of the following:
Other
Share
Total other
reserves
premium
reserves
$m
$m
$m
As at 31 December 2021
0.6
1,055.4
1,056.0
Equity-based incentive expense
2.1
-
2.1
Transfer from share premium to contributed surplus
1,055.4
(1,055.4)
-
As at 31 December 2022
1,058.1
-
1,058.1
Equity-based incentive expense
2.5
-
2.5
Distributions by EBT
(1.0)
-
(1.0)
As at 31 December 2023
1,059.6
-
1,059.6
Other reserves include Conduit\u2019s equity-based incentive expense.
Share premium includes any premiums received on issue of share capital. The transaction costs that were
attributable to the issuance of new shares incurred in forming Conduit were treated as a deduction from
share premium. The share premium was transferred to contributed surplus during May 2022 after
approval by Conduit's shareholders at the AGM.
19. Contingencies and commitments
Legal proceedings and regulations
Conduit operates in the reinsurance industry and is subject to legal proceedings in the normal course of
business. While it is not practicable to estimate or determine the final results of all pending or
threatened legal proceedings, management does not believe that any such proceedings (including
litigation) will have a material effect on its results and financial position.
20. Earnings (loss) per share
The following reflects the earnings (loss) and share data used in the basic and diluted loss per share
computations:
2023
2022
Year ended 31 December
$m
$m
Total comprehensive income (loss)
190.8
(43.9)
Number
Number
Basic weighted average number of shares
160,103,836
163,441,264
Dilutive effect of equity-based incentives
461,091
167,093
Diluted weighted average number of shares
160,564,927
163,608,357
Earnings (loss) per share
Per share $
Per share $
Basic
1.19
(0.27)
Diluted
1.19
(0.27)
Equity-based incentive awards are only treated as dilutive when their conversion to common shares would
decrease earnings per share or increase loss per share from continuing operations. Incremental shares from
ordinary restricted share options where relevant performance criteria have not been met are not included in
the calculation of dilutive shares.
21.
Related party disclosures
These consolidated financial statements include CHL and the entities listed below:
Subsidiary undertakings
Domicile
Principal Business
CHL
Bermuda
Holding company, Ultimate parent
CRL
Bermuda
General insurance business
CRSL
England and Wales
Support services
CML1
Bermuda
Support services
CSL
Bermuda
Support services
EBT
Jersey
Employee benefit trust
1.
CML is part-owned by members of management. Management\u2019s share ownership in CML exists solely for the
purposes of the Group\u2019s management share incentive scheme for attracting and retaining talent. Management\u2019s
shares in CML have no voting power or control in respect of CHL's ownership of CRL via CML's ownership of CRL.
Unless otherwise stated, Conduit owns 100% of the share capital and voting rights in the
subsidiaries listed.
Employee benefit trust
The EBT was established with the sole purpose of administering Conduit's equity-based incentive
schemes. The trustee operates the trust for the benefit of Conduit's employees, all in accordance
with an established trust deed. While Conduit does not have legal ownership of the EBT, the trust
is consolidated in Conduit's accounts due to the ability that Conduit has to influence the actions of
the trust.
Funding for the trust is provided by CHL through a non-interest bearing loan facility. The facility
may only be used by the trustee for the purpose of achieving the objectives of the EBT. During
the year ended 31 December 2023, advances of $13.7 million (31 December 2022: $16.5 million)
were made to the trust.
CHL common shares purchased by the EBT will be held for the benefit of employees under CHL's
variable incentive schemes. During the year ended 31 December 2023 the trust purchased
common shares of 2,336,000 (31 December 2022: 4,341,000).
On 18 May 2023, CHL completed the transfer of 757,823 common shares held in treasury with a
value of $3.6 million to the EBT
During the year ended 31 December 2023 the EBT distributed 250,963 shares with a value of
$0.9 million to employees. There were no distributions for the year ended 31 December 2022.
Stabilitas Re
Stabilitas Re Limited a special purpose vehicle (Stabilitas Re), was launched in June 2023.
Conduit sponsored the launch of a catastrophe bond issued by Stabilitas Re and CRL entered
into a collateralised reinsurance agreement with Stabilitas Re as part of the transaction. The
catastrophe bond was issued to third-party investors by Stabilitas Re. Conduit has no ownership
interest in nor any control over Stabilitas Re and therefore does not consolidate that entity.
Key management compensation
Remuneration for key management of Conduit\u2019s Executive Group, and Non-Executive Directors, was
as follows:
2023
2022
Year ended 31 December
$m
$m
Cash compensation
9.1
4.7
Equity-based incentive expense
1.8
1.4
Directors fees and expenses
0.8
0.8
Total
11.7
6.9
year. Prior year comparatives have not been re-stated as they were not deemed to be key management for that year.
Loans to employees, including key management, to assist with environmental and other projects,
have been made by CSL. These loans are short term and interest free. Any financial benefit to the
employee is generally not material.
Non-Executive Directors do not receive any benefits in addition to their agreed fees and expenses and
do not participate in any of Conduit\u2019s incentive, performance or pension plans.
IncubEx, Inc.
Effective 9 April 2021, CHL executed a stock purchase agreement with IncubEx, a product and
business development firm with a focus on designing and developing new financial products in
global environmental, reinsurance and related commodity markets. CHL purchased 624 shares
of IncubEx\u2019s Series A-3 preferred stock, with a par value of $0.0001 per share, for an aggregate
purchase price of $50,000, or $80.08 per share.
The current Executive Chairman of CHL is also a founder and current Chairman of IncubEx.
The terms and conditions of the stock purchase agreement are equivalent to those that would
prevail in an arm\u2019s length transaction. The investment in IncubEx is included in other assets in the
consolidated balance sheet and is recorded at cost, which approximates fair value.
22.
Transition to IFRS 17 and IFRS 9
IFRS 17, Insurance Contracts
IFRS 17 replaces IFRS 4 Insurance Contracts for annual periods on or after 1 January 2023. In
addition to the updated accounting policies and disclosure in notes 2, 3, 4, 6 and 14, some of the
key differences between IFRS 17 and the accounting policies previously adopted by Conduit
under IFRS 4 are outlined below.
Changes to classification and measurement
The adoption of IFRS 17 did not change the classification of Conduit\u2019s reinsurance contracts
issued or ceded reinsurance contracts held. Under IFRS 17, Conduit's reinsurance contracts issued
and reinsurance contracts held are all eligible to be measured by applying the PAA.
The measurement principles of the PAA are similar to accounting policies previously applied
under IFRS 4 but are different in the following key areas:
Under IFRS 4 gross premiums written were recognised at the top of the consolidated statement
of comprehensive income (loss) with an adjustment for the change in the unearned premium
liability. IFRS 17 defines reinsurance revenue as the expected premium cash flows net of any
deductions that are paid to the cedant, excluding any investment components.
If contracts are assessed as being onerous, a loss component is recognised. Previously these may
have formed an unexpired risk reserve provision determined through the liability adequacy test.
Previously, only contract specific acquisition cash flows were deferred and amortised. Under IFRS
17, the recognition of reinsurance acquisition expense cash flows includes an allocation of
acquisition-related operating expenses incurred in the period.
Conduit recognises its reinsurance acquisition expense cash flows as part of the liability or asset
for remaining coverage and amortises over the coverage period in line with the service provided.
Measurement of the liability for incurred claims (previously losses and loss adjustment expenses)
is determined on a discounted probability-weighted expected value basis and includes an explicit
risk adjustment for non-financial risk. Previously, under IFRS 4, losses and loss adjustment
expenses were undiscounted without an explicit adjustment for non-financial risk.
IFRS 17 identifies cash flows that are contingent on claims as being presented within the
reinsurance service expenses, such as reinstatement premiums and profit commissions.
Previously under IFRS 4 these were recorded in gross premiums written and net acquisition
expenses, respectively. Similar presentation impacts are noted on ceded reinsurance contracts,
with cash flows that are contingent on recoveries, such as reinstatement premiums paid and
profit commissions received, presented within ceded reinsurance recoveries.
Changes to presentation and disclosure
Under IFRS 4 separate assets and liabilities were recognised for premium receivables, deferred
acquisition costs, unearned premiums, and loss and loss adjustment reserves. These assets and
liabilities were shown aggregated for all reinsurance contracts, separately for ceded. IFRS 17
groups the reinsurance assets and liabilities by portfolio, as defined by Conduit\u2019s level of
aggregation accounting policy in note 2, separately for reinsurance contracts issued and ceded
reinsurance contracts held and presents a net asset or liability for the portfolio as a whole. This
means that different portfolios could be in an asset or liability position depending on the timing
of cash flows.
The consolidated statement of comprehensive income (loss) has changed significantly in its
presentation. Previously Conduit reported items such as gross premiums written, net premiums
earned and loss and loss adjustment expenses. Under IFRS 17, the standard defines and requires
separate presentation of reinsurance revenue and reinsurance service expenses. Conduit has
chosen to present income and expenses from ceded reinsurance contracts as separate line items.
As at
31 December 2021
(as reported)
$m
1 January 2022
(re-stated)
$m
Impact of
adopting IFRS 17
Assets
Cash and cash equivalents
67.5
67.5
-
Accrued interest receivable
3.7
3.7
-
Investments
1,008.4
1,008.4
-
Inwards premiums receivable
155.0
-
(155.0)
Ceded reinsurance
contract assets
50.0
41.0
(9.0)
Other assets
1.6
1.6
-
Right-of-use lease assets
2.9
2.9
-
Deferred acquisition expenses
44.6
-
(44.6)
Intangible assets
1.1
1.1
-
Total assets
1,334.8
1,126.2
(208.6)
Liabilities
Reinsurance contract liabilities
324.4
116.1
(208.3)
Amounts payable to reinsurers
7.3
-
(7.3)
Other payables
19.0
19.0
-
Lease liabilities
2.9
2.9
-
Total liabilities
353.6
138.0
(215.6)
The standard requires separate presentation of reinsurance finance income or expense which rep
esents the unwind of di
Transition to IFRS 17
Changes in accounting policies resulting from the adoption of IFRS 17 have been applied using a
full retrospective approach. Under the full retrospective approach, as at 1 January 2022 Conduit:
\u2014
Identified, recognised and measured each group of reinsurance contracts as if IFRS 17 had
always applied;
\u2014
Derecognised any existing balances that would not exist had IFRS 17 always applied. These
include deferred acquisition expenses, reinsurance receivables and payables, net loss and loss
adjustment expense reserves and unearned premium reserves. Under IFRS 17 they are
included in the measurement of reinsurance contract assets or liabilities; and
\u2014
Recognised any resulting net difference in equity.
The increase to shareholders\u2019 equity from the application of IFRS 17 is predominantly driven by
the discounting of net loss reserves which were previously undiscounted, the deferral of certain
acquisition-related operating expenses and the revaluation of reinsurance balances that are
now considered monetary items under IFRS 17. The impacts of discounting and the deferral
of acquisition-related operating expenses are timing differences as both will be unwound over
the settlement of claims liabilities and insurance contract coverage periods respectively. The
effects of adopting IFRS 17 on the consolidated financial statements as at 1 January 2022 are
shown below. Similar impacts were noted on the consolidated financial statements as at
31 December 2022.
As at
31 December 2021
(as reported)
$m
1 January 2022
(re-stated)
$m
Impact of
adopting IFRS 17
Shareholders' equity
Share capital
1.7
1.7
-
Own shares
(0.2)
(0.2)
-
Other reserves
1,056.0
1,056.0
-
Retained loss
(76.3)
(69.3)
7.0
Total shareholders' equity
981.2
988.2
7.0
Total liabilities and
shareholders' equity
1,334.8
1,126.2
(208.6)
\u2014
Equity instruments at fair value through other comprehensive income, with no recycling of
gains or losses to profit or loss on derecognition and
\u2014
Debt instruments at amortised cost.
Conduit\u2019s classification of its financial assets is explained in the accounting policies beginning on
page 102 in note 2. Conduit's financial investment portfolio of fixed maturity securities meets the
requirements for mandatory FVTPL which is consistent with the measurement of Conduit\u2019s
previous accounting policies under IAS 39.
The classification and measurement of financial liabilities under IFRS 9 remains the same as IAS
39, except where a financial liability is designated as FVTPL.
IFRS 9, Financial Instruments
IFRS 9 replaced IAS 39, Financial Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018. However, Conduit elected, under the amendments to IFRS
4, to apply the temporary exemption from IFRS 9, thereby deferring the initial application date
of IFRS 9 to align with the initial application of IFRS 17.
Changes to classification and measurement
To determine their classification and measurement category, IFRS 9 requires all financial assets to
be assessed based on a combination of Conduit\u2019s business model for managing the assets and
the instruments\u2019 contractual cash flow characteristics. The IAS 39 measurement categories for
financial assets (fair value through profit or loss (FVTPL), available for sale (AFS), held-to-
maturity (HTM) and loans and receivables (L&R) at amortised cost) have been replaced by:
\u2014
Financial assets at fair value through profit or loss, including debt instruments, equity
instruments and derivatives;
\u2014
Debt instruments at fair value through other comprehensive income, with gains or losses
recycled to profit or loss on derecognition;
Changes to presentation and disclosure
To reflect the differences between IAS 39 and IFRS 9, IFRS 7 Financial Instruments: Disclosures
was also amended. There was no impact to Conduit from these amendments with the
implementation of IFRS 9.
Transition to IFRS 9
As Conduit's accounting policies under IFRS 9 are consistent with those applied under IAS 39,
there is no financial impact on transition. There is therefore no restatement of comparatives nor
any impact from adoption on shareholders' equity.
23.
Subsequent events
Dividends
On 20 February 2024, Conduit\u2019s Board of Directors declared a final dividend for 2023 of
$0.18 (approximately \u00a30.14) per common share, which will result in an aggregate payment of
$29.7 million. The dividend will be paid in pounds sterling on 24 April 2024 to shareholders of
record on 22 March 2024 (the Record Date) using the pound sterling / US dollar spot exchange
rate at 12 noon on the Record Date.
Additional information
Additional performance measures (the \u201cAPMs\u201d)
Conduit presents certain APMs to evaluate, monitor and manage the business and to aid readers\u2019 understanding of Conduit's financial statements and methodologies used. These are common
measures used across the (re)insurance industry and allow the reader of Conduit's financial reports to compare those with other companies in the (re)insurance industry. The APMs should be viewed
as complementary to, rather than a substitute for, the figures prepared in accordance with IFRS. Conduit\u2019s Audit Committee has evaluated the use of these APMs and reviewed their overall
presentation to ensure that they were not given undue prominence. This information has not been audited.
Management believes the APMs included in the consolidated financial statements are important for understanding Conduit\u2019s overall results of operations and may be helpful to investors and other
interested parties who may benefit from having a consistent basis for comparison with other companies within the (re)insurance industry. However, these measures may not be comparable to
similarly labelled measures used by companies inside or outside the (re)insurance industry. In addition, the information contained herein should not be viewed as superior to, or a substitute for,
the measures determined in accordance with the accounting principles used by Conduit for its audited consolidated financial statements or in accordance with IFRS.
Below are explanations, and associated calculations, of the APMs presented by Conduit:
APM
Explanation
Calculation
Gross premiums written (KPI)
For the majority of excess of loss contracts, premiums written are recorded
based on the minimum and deposit or flat premium, as defined in the contract.
Premiums written for proportional contracts on a risks attaching basis are
written over the term of the contract in line with the underlying exposures.
Subsequent adjustments, based on reports of actual premium by the ceding
company, or revisions in estimates, are recorded in the period in which they are
determined. Reinstatement premiums are excluded.
Amounts payable by the cedant before any deductions, which may include
taxes, brokerage and commission.
\"image\"
Net loss ratio (discounted and
undiscounted)
Reinsurance operating expense
ratio
Ratio of net losses and loss related amounts expressed as a percentage of net
reinsurance revenue in a period. This can be calculated using discounted or
undiscounted net losses and loss related amounts.
Ratio of reinsurance operating expenses, which includes acquisition expenses
charged by insurance brokers and other insurance intermediaries to Conduit,
and operating expenses paid that are attributable to the fulfilment of
reinsurance contracts, expressed as a percentage of net reinsurance revenue
in a period.
Net losses and loss related amounts / Net reinsurance revenue
Undiscounted net losses and loss related amounts / Net reinsurance revenue
(note 4)
Reinsurance operating expenses / Net reinsurance revenue
(note 4)
\"image\"
Additional information continued
Additional performance measures (the \u201cAPMs\u201d)
continued
APM
Explanation
Calculation
Other operating expense ratio
Ratio of other operating expenses expressed as a percentage of net
reinsurance revenue in a period.
Other operating expenses / Net reinsurance revenue
(note 4)
Combined ratio (KPI)
The sum of the net loss ratio, reinsurance operating expense ratio and other
Net loss ratio + Net reinsurance operating expense ratio + Other operating
operating expense ratio. Other operating expenses are not allocated to the
expense ratio
segment combined ratio.
(note 4)
Combined ratio (undiscounted)
The sum of the net loss ratio (undiscounted), reinsurance operating expense
Net loss ratio (undiscounted) + Net reinsurance operating expense ratio +
ratio and other operating expense ratio. Other operating expenses are not
Other operating expense ratio
allocated to the segment combined ratio.
(note 4)
Accident year loss ratio
Ratio of the net losses and loss related amounts of an accident year (or
Accident year net losses and loss related amounts / Net reinsurance revenue
calendar year) revalued at the current balance sheet date expressed as
a percentage of net reinsurance revenue in a period.
Total net investment return (KPI)
Conduit's principal investment objective is to preserve capital and provide
Net investment income + Net unrealised gains (losses) on investments + Net
adequate liquidity to support the payment of losses and other liabilities. In light
realised gains (losses) on investments / Non-operating cash and cash
of this, Conduit looks to generate an appropriate total net investment return.
equivalents + Fixed maturity securities, at beginning of period
Conduit bases its total net investment return on the sum of non-operating cash
and cash equivalents and fixed maturity securities. Total net investment return
is calculated daily and expressed as a percentage.
Return on equity (KPI)
RoE enables Conduit to compare itself against other peer companies in the
Profit (loss) after tax for the period / Total shareholders' equity, at beginning
immediate industry. It is also a key measure internally and is integral in the
of period
performance-related pay determinations. RoE is calculated as the profit for
the period divided by the opening total shareholders' equity.
Additional information continued
Additional performance measures (the \u201cAPMs\u201d)
continued
APM
Explanation
Calculation
Total shareholder return (KPI)
Total shareholder return allows Conduit to compare itself against other public
peer companies. Total shareholder return is calculated as the percentage
change in Common Share price over a period, after adjustment for Common
Share dividends.
Closing Common Share price, at end of period - Opening Common Share price,
at beginning of period + Common Share dividends during the period / Opening
Common Share price, at beginning of period
\"image\"
Dividend yield
Calculated by dividing the annual dividends per Common Share by the
Common Share price on the last day of the given year and expressed as
a percentage.
Annual dividends per Common Share / Closing Common Share price
\"image\"
Net tangible assets per share
(KPI)
This provides a measure of book value per share for all shares in issue less own
shares held in treasury or the EBT trust.
Total shareholders' equity less intangible assets, at the end of the period / Total
common shares in issue less own shares held
The GBP equivalent of NTAVS is calculated using the end of period exchange
rate between USD and GBP.
Advisers and contact information
Conduit Holdings Limited
Bermuda Company Registration Number 55936
Office address
Ideation House
94 Pitts Bay Road
Pembroke HM08 Bermuda
T: +1 441 276 1000
Registered address
Clarendon House
2 Church Street
Hamilton HM11 Bermuda
Shareholder contacts
Company Secretary
Greg Lunn
E: legal@conduitre.bm
Investor relations
E: info@conduitre.bm
Registrar
Computershare Investor
Services (Bermuda) Limited
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
United Kingdom
T: +44 370 702 0000
Advisers
Financial advisers
Kinmont Limited
5 Clifford Street
London, W1S 2LG
United Kingdom
Brokers
Peel Hunt
100 Liverpool Street
London EC2M 2AT
United Kingdom
Berenberg
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Panmure Gordon & Co
One New Change
London EC4M 9AF
United Kingdom
Auditors
KPMG Audit Limited
Crown House
4 Par-la-Ville Road
Hamilton HM 08 Bermuda
Bankers
HSBC Bank Bermuda Limited
37 Front Street
Hamilton HM 11 Bermuda", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48872": { "value": "General informationCHL was incorporated under the laws of Bermuda on 6 October 2020 and, on 7 December 2020,all of its common shares of par value $0.01 per share were admitted to the standard listingsegment of the Official List of the UK Financial Conduct Authority and admitted to trading on theLSE\u2019s main market for listed securities. CHL\u2019s registered office is Clarendon House, 2 ChurchStreet, Hamilton HM 11, Bermuda. CHL's consolidated financial statements as at, and for the yearended 31 December 2023 include the Company's subsidiaries. The principal activity of Conduitis to provide reinsurance products and services to its clients worldwide.A full listing of Conduit's related parties can be found in note 21.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48879": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48880": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48889": { "value": "Clarendon House, 2 ChurchStreet, Hamilton HM 11, Bermuda", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48899": { "value": "The principal activity of Conduitis to provide reinsurance products and services to its clients worldwide.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48904": { "value": "worldwide", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48927": { "value": "Excluding percentages, share and per share data or where otherwise stated, allamounts in tables and narrative disclosures are in millions of US dollars.", "dimensions": { "concept": "ifrs-full:DescriptionOfPresentationCurrency", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48933": { "value": "Basis of preparationThese consolidated financial statements are prepared on a going concern basis in accordancewith IFRS as issued by the IASB, and the DTR issued by the Financial Conduct Authority, and areprepared on a historical cost basis, except for items measured at fair value as disclosed in therelevant accounting policies. In accordance with the requirements of IAS 1, the financialstatements\u2019 assets and liabilities have been presented in order of liquidity, which providesinformation that is more reliable and relevant for a financial institution.In the course of preparing these consolidated financial statements, no judgements have beenmade in the process of applying Conduit\u2019s accounting policies, other than those involvingestimations as noted in the \u2018Use of judgements and estimates\u2019 section, that have had a significanteffect on amounts recognised in these consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48998": { "value": "Going concernThe consolidated financial statements of Conduit have been prepared on a going concern basis.In assessing Conduit's going concern position as at 31 December 2023, the Board haveconsidered a number of factors, including the current balance sheet position and Conduit\u2019sstrategic and financial plan, taking account of possible changes in trading performance andfunding retention, stress testing and scenario analysis. Conduit\u2019s capital ratios and its capitalresources are comfortably in excess of regulatory solvency requirements, and internal stresstesting indicates Conduit can withstand severe economic and competitive stresses.As a result of the assessment, the Board have a reasonable expectation that CHL and CRL haveadequate resources to continue in operational existence for the foreseeable future and thereforebelieve that Conduit is well placed to manage its business risks successfully. Accordingly, theycontinue to adopt the going concern basis in preparing the consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49034": { "value": "
Changes in accounting policies and new standards
As previously disclosed, Conduit has initially applied IFRS 17 and IFRS 9, including any
consequential amendments to other standards, from 1 January 2023. There are no other new
or amended IFRS reporting standards, that have a material effect, that have become effective
during the year. IFRS 17 has had a significant impact on accounting for reinsurance contracts.
As a result, Conduit has restated certain comparative amounts and presented an additional
consolidated balance sheet as at 1 January 2022. Conduit\u2019s updated accounting policies for
reinsurance contracts and financial instruments are set out below. Disclosures relating to the
transition to IFRS 17 and IFRS 9 have been set out in note 22.
Future accounting changes
Of the upcoming accounting standard changes, we do not anticipate that any will have a material
impact on the financial statements\u2019 results, or presentation and disclosures.
Transition to IFRS 17 and IFRS 9
IFRS 17, Insurance Contracts
IFRS 17 replaces IFRS 4 Insurance Contracts for annual periods on or after 1 January 2023. In
addition to the updated accounting policies and disclosure in notes 2, 3, 4, 6 and 14, some of the
key differences between IFRS 17 and the accounting policies previously adopted by Conduit
under IFRS 4 are outlined below.
Changes to classification and measurement
The adoption of IFRS 17 did not change the classification of Conduit\u2019s reinsurance contracts
issued or ceded reinsurance contracts held. Under IFRS 17, Conduit's reinsurance contracts issued
and reinsurance contracts held are all eligible to be measured by applying the PAA.
The measurement principles of the PAA are similar to accounting policies previously applied
under IFRS 4 but are different in the following key areas:
Under IFRS 4 gross premiums written were recognised at the top of the consolidated statement
of comprehensive income (loss) with an adjustment for the change in the unearned premium
liability. IFRS 17 defines reinsurance revenue as the expected premium cash flows net of any
deductions that are paid to the cedant, excluding any investment components.
If contracts are assessed as being onerous, a loss component is recognised. Previously these may
have formed an unexpired risk reserve provision determined through the liability adequacy test.
Previously, only contract specific acquisition cash flows were deferred and amortised. Under IFRS
17, the recognition of reinsurance acquisition expense cash flows includes an allocation of
acquisition-related operating expenses incurred in the period.
Conduit recognises its reinsurance acquisition expense cash flows as part of the liability or asset
for remaining coverage and amortises over the coverage period in line with the service provided.
Measurement of the liability for incurred claims (previously losses and loss adjustment expenses)
is determined on a discounted probability-weighted expected value basis and includes an explicit
risk adjustment for non-financial risk. Previously, under IFRS 4, losses and loss adjustment
expenses were undiscounted without an explicit adjustment for non-financial risk.
IFRS 17 identifies cash flows that are contingent on claims as being presented within the
reinsurance service expenses, such as reinstatement premiums and profit commissions.
Previously under IFRS 4 these were recorded in gross premiums written and net acquisition
expenses, respectively. Similar presentation impacts are noted on ceded reinsurance contracts,
with cash flows that are contingent on recoveries, such as reinstatement premiums paid and
profit commissions received, presented within ceded reinsurance recoveries.
Changes to presentation and disclosure
Under IFRS 4 separate assets and liabilities were recognised for premium receivables, deferred
acquisition costs, unearned premiums, and loss and loss adjustment reserves. These assets and
liabilities were shown aggregated for all reinsurance contracts, separately for ceded. IFRS 17
groups the reinsurance assets and liabilities by portfolio, as defined by Conduit\u2019s level of
aggregation accounting policy in note 2, separately for reinsurance contracts issued and ceded
reinsurance contracts held and presents a net asset or liability for the portfolio as a whole. This
means that different portfolios could be in an asset or liability position depending on the timing
of cash flows.
The consolidated statement of comprehensive income (loss) has changed significantly in its
presentation. Previously Conduit reported items such as gross premiums written, net premiums
earned and loss and loss adjustment expenses. Under IFRS 17, the standard defines and requires
separate presentation of reinsurance revenue and reinsurance service expenses. Conduit has
chosen to present income and expenses from ceded reinsurance contracts as separate line items.
As at
31 December 2021
(as reported)
$m
1 January 2022
(re-stated)
$m
Impact of
adopting IFRS 17
Assets
Cash and cash equivalents
67.5
67.5
-
Accrued interest receivable
3.7
3.7
-
Investments
1,008.4
1,008.4
-
Inwards premiums receivable
155.0
-
(155.0)
Ceded reinsurance
contract assets
50.0
41.0
(9.0)
Other assets
1.6
1.6
-
Right-of-use lease assets
2.9
2.9
-
Deferred acquisition expenses
44.6
-
(44.6)
Intangible assets
1.1
1.1
-
Total assets
1,334.8
1,126.2
(208.6)
Liabilities
Reinsurance contract liabilities
324.4
116.1
(208.3)
Amounts payable to reinsurers
7.3
-
(7.3)
Other payables
19.0
19.0
-
Lease liabilities
2.9
2.9
-
Total liabilities
353.6
138.0
(215.6)
The standard requires separate presentation of reinsurance finance income or expense which rep
esents the unwind of di
Transition to IFRS 17
Changes in accounting policies resulting from the adoption of IFRS 17 have been applied using a
full retrospective approach. Under the full retrospective approach, as at 1 January 2022 Conduit:
\u2014
Identified, recognised and measured each group of reinsurance contracts as if IFRS 17 had
always applied;
\u2014
Derecognised any existing balances that would not exist had IFRS 17 always applied. These
include deferred acquisition expenses, reinsurance receivables and payables, net loss and loss
adjustment expense reserves and unearned premium reserves. Under IFRS 17 they are
included in the measurement of reinsurance contract assets or liabilities; and
\u2014
Recognised any resulting net difference in equity.
The increase to shareholders\u2019 equity from the application of IFRS 17 is predominantly driven by
the discounting of net loss reserves which were previously undiscounted, the deferral of certain
acquisition-related operating expenses and the revaluation of reinsurance balances that are
now considered monetary items under IFRS 17. The impacts of discounting and the deferral
of acquisition-related operating expenses are timing differences as both will be unwound over
the settlement of claims liabilities and insurance contract coverage periods respectively. The
effects of adopting IFRS 17 on the consolidated financial statements as at 1 January 2022 are
shown below. Similar impacts were noted on the consolidated financial statements as at
31 December 2022.
As at
31 December 2021
(as reported)
$m
1 January 2022
(re-stated)
$m
Impact of
adopting IFRS 17
Shareholders' equity
Share capital
1.7
1.7
-
Own shares
(0.2)
(0.2)
-
Other reserves
1,056.0
1,056.0
-
Retained loss
(76.3)
(69.3)
7.0
Total shareholders' equity
981.2
988.2
7.0
Total liabilities and
shareholders' equity
1,334.8
1,126.2
(208.6)
\u2014
Equity instruments at fair value through other comprehensive income, with no recycling of
gains or losses to profit or loss on derecognition and
\u2014
Debt instruments at amortised cost.
Conduit\u2019s classification of its financial assets is explained in the accounting policies beginning on
page 102 in note 2. Conduit's financial investment portfolio of fixed maturity securities meets the
requirements for mandatory FVTPL which is consistent with the measurement of Conduit\u2019s
previous accounting policies under IAS 39.
The classification and measurement of financial liabilities under IFRS 9 remains the same as IAS
39, except where a financial liability is designated as FVTPL.
IFRS 9, Financial Instruments
IFRS 9 replaced IAS 39, Financial Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018. However, Conduit elected, under the amendments to IFRS
4, to apply the temporary exemption from IFRS 9, thereby deferring the initial application date
of IFRS 9 to align with the initial application of IFRS 17.
Changes to classification and measurement
To determine their classification and measurement category, IFRS 9 requires all financial assets to
be assessed based on a combination of Conduit\u2019s business model for managing the assets and
the instruments\u2019 contractual cash flow characteristics. The IAS 39 measurement categories for
financial assets (fair value through profit or loss (FVTPL), available for sale (AFS), held-to-
maturity (HTM) and loans and receivables (L&R) at amortised cost) have been replaced by:
\u2014
Financial assets at fair value through profit or loss, including debt instruments, equity
instruments and derivatives;
\u2014
Debt instruments at fair value through other comprehensive income, with gains or losses
recycled to profit or loss on derecognition;
Changes to presentation and disclosure
To reflect the differences between IAS 39 and IFRS 9, IFRS 7 Financial Instruments: Disclosures
was also amended. There was no impact to Conduit from these amendments with the
implementation of IFRS 9.
Transition to IFRS 9
As Conduit's accounting policies under IFRS 9 are consistent with those applied under IAS 39,
there is no financial impact on transition. There is therefore no restatement of comparatives nor
any impact from adoption on shareholders' equity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49081": { "value": "Use of judgements and estimatesThe preparation of financial statements in conformity with IFRS requires Conduit to makejudgements and estimates that affect the reported and disclosed amounts at the balance sheetdate, revenues and expenses during the reporting period and the associated financial statementdisclosures. All estimates are based on management\u2019s knowledge of current facts andcircumstances, assumptions based on that knowledge and their prediction of future events.Actual results may differ significantly from the estimates made.The most significant estimates made by management are in relation to the liability for incurredclaims and associated ceded reinsurance recoveries, as discussed in note 3 and note 14.Less significant estimates are made in determining the estimated fair value of certain financialinstruments, as discussed in note 3 and note 12.In addition, some management judgement is exercised in determining the total premiumcashflows expected to be received from reinsurance contracts that are used to determine theamount of reinsurance revenue recognised in the period.While not significant, estimates are also used in the estimated fair value of the MIP as discussedin note 7.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49296": { "value": "Consolidation principlesThese consolidated financial statements comprise the financial statements of CHL and itssubsidiaries as at and for the year ended 31 December 2023. Subsidiaries are those entities thatare controlled by Conduit and are fully consolidated from the date on which Conduit obtainscontrol and continue to be consolidated until the date when such control ceases. Control isachieved when Conduit is exposed, or has rights, to variable returns from its involvement withthe subsidiary and has the ability to affect those returns through its power over the subsidiary.Intragroup balances and transactions are eliminated in preparing the consolidated financialstatements. Subsidiaries\u2019 accounting policies are generally consistent with Conduit\u2019saccounting policies.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49351": { "value": "Foreign currencyThe functional currency, which is the currency of the primary economic environment in whichConduit operates, is US dollars. Items included in the financial statements of each entity aremeasured using the functional currency. These consolidated financial statements are presentedin US dollars.Foreign currency transactions are recorded in the functional currency for each entity using theexchange rates prevailing at the dates of the transactions. Monetary assets and liabilitiesdenominated in foreign currencies are revalued at period end exchange rates. The resultingforeign exchange differences on revaluation are recorded in the consolidated statement ofcomprehensive income (loss) within net foreign exchange gains (losses). Non-monetary assetsand liabilities denominated in a foreign currency are carried at historic rates. Non-monetaryassets and liabilities carried at estimated fair value and denominated in a foreign currency aretranslated at the exchange rate at the date the fair value was determined.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49387": { "value": "Reinsurance contractsPrior to IFRS 17 coming into effect, IFRS was silent in respect of certain aspects relating to themeasurement of reinsurance contracts. In such instances, the IFRS framework allows referenceto another comprehensive body of accounting principles. Conduit\u2019s management thereforedetermined appropriate measurement bases, to provide the most useful information to usersof the financial statements, using their judgement and considering US GAAP.IFRS 17 sets out the classification, measurement and presentation and disclosure requirements forreinsurance contracts. It requires reinsurance contracts to be measured using current estimatesand assumptions that reflect the timing of cash flows and recognition of profits as insuranceservices are delivered. The standard provides two main measurement models which are theGeneral Measurement Model (GMM) and the Premium Allocation Approach (PAA).The PAA simplifies the measurement of reinsurance contracts for remaining coverage, or pre-claims, in comparison to the GMM. The PAA is similar to Conduit\u2019s previous accounting policiesunder IFRS 4 for calculating revenue, however there are some key presentation changes withrespect to certain commissions. The GMM is used for the measurement of the liability forincurred claims.PAA eligibilityUnder IFRS 17, Conduit\u2019s reinsurance contracts issued and ceded reinsurance contracts heldare all eligible to be measured by applying the PAA, due to meeting the following criteria:\u2014Loss-occurring reinsurance contracts with coverage period of one year or less areautomatically eligible; and\u2014Modelling of risk-attaching contracts or contracts with a coverage period greater than oneyear produces a measurement for the group of reinsurance contracts that does not differmaterially from that which would be produced applying the GMM.ClassificationContracts that transfer significant reinsurance risk at the inception of the contract are accountedfor as reinsurance contracts. Contracts purchased and held by Conduit under which it transferssignificant reinsurance risk to a counterparty are accounted for as ceded reinsurance contracts.Contracts that do not transfer significant reinsurance risk are accounted for as investmentcontracts. Reinsurance risk is transferred when a reinsurer agrees to compensate a policyholderif a specified uncertain future event adversely affects the policyholder.Conduit\u2019s accounting policies apply to both reinsurance contracts issued and ceded reinsurancecontracts held unless explicitly referenced as applying to contracts issued or ceded only. Conduitwrites both excess of loss and proportional (also known as quota share or pro-rata) reinsurancecontracts. The type of contract impacts the recognition of reinsurance revenue. Contract typesare discussed on page 106.Separating components from reinsurance contractsIFRS 17 distinguishes three components that, if embedded in a reinsurance contract, should bebifurcated, and accounted for separately. These are:\u2014Cash flows relating to embedded derivatives that are required to be separated;\u2014Cash flows relating to distinct investment components; and\u2014Promises to transfer distinct goods or distinct non-insurance services.IFRS 17 then applies to all remaining components of the contract. Conduit does not have anycontracts containing non-insurance components that require separation. Where contracts containmultiple reinsurance components that meet the requirements for separation, these are separatedand accounted for as standalone contracts.Some reinsurance contracts issued contain profit sharing arrangements, such as profitcommissions and no claims bonuses. Under these arrangements, there is a minimum guaranteedamount that the policyholder will always receive either in the form of profit commission, or asreimbursement for claims, or another contractual payment, irrespective of the insured eventhappening. These are typically considered non-distinct investment components. Non-distinctinvestment components are not separated from the reinsurance contract as they are closelyinterrelated to the measurement of the reinsurance contract. However, the impact of the non-distinct investment components are excluded from the consolidated statement of comprehensiveincome (loss) by adjusting reinsurance revenue and reinsurance service expenses by theminimum amount due. There is no impact to the reinsurance service result as there is an equalreduction to both revenue and expenses.Level of aggregationConduit manages reinsurance contracts issued by class of business within an operating segment.Classes of business are aggregated into portfolios of contracts that are subject to similar risks.Contracts within each portfolio are grouped into groups of contracts that are issued within acalendar year, the annual cohort, and are (i) contracts that are onerous at initial recognition; (ii)contracts that at initial recognition have no significant possibility of subsequently becomingonerous; or (iii) a group of remaining contracts. These groups represent the level of aggregationat which reinsurance contracts are initially recognised and measured. Such groups are notsubsequently reconsidered.Onerous contractsUnder the PAA, it is assumed there are no contracts in the portfolio that are onerous at initialrecognition, unless there are facts and circumstances that may indicate otherwise. Managementprimarily considers the following to determine whether there are facts and circumstances thatmean a group of contracts are onerous:\u2014Pricing information;\u2014Results of similar contracts it has recognised; and\u2014External factors, such as a change in market experience or regulations.If a group of contracts becomes onerous, Conduit increases the carrying amount of the liabilityfor remaining coverage to the amount of the fulfilment cash flows with the amount of such anincrease recognised immediately in reinsurance service expenses. Subsequently, Conduitamortises the amount of the loss component by decreasing reinsurance service expenses. Theloss component amortisation is based on the passage of time over the remaining coverageperiod of contracts within an onerous group. If facts and circumstances indicate that theexpected profitability of the onerous group during the remaining coverage has changed, thenConduit remeasures the loss component by reassessing the fulfilment cash flows as required untilthe loss component is reduced to zero.Where a loss component is expected to be partially or fully recovered by ceded reinsurancecontracts, the amount of recovery is recognised in ceded reinsurance recoveries.RecognitionConduit recognises groups of reinsurance contracts it issues from the earliest of:\u2014The beginning of the coverage period of the group of contracts;\u2014The date when the first payment from the cedant is due or when the first payment is receivedif there is no due date; or\u2014For a group of onerous contracts, the date when facts and circumstances indicate that thegroup is onerous.For ceded reinsurance contracts Conduit recognises the group of contracts:\u2014If the reinsurance contracts provide proportionate coverage, at the later of the beginning ofthe coverage period of the group, or the initial recognition of the underlying coveredreinsurance contracts issued; or\u2014For non-proportionate coverage, the beginning of the coverage period of the group ofcontracts, unless an onerous group of underlying reinsurance contracts have been recognisedand the ceded reinsurance contract has been signed before that date.Modification and derecognitionConduit derecognises reinsurance contracts when:\u2014The rights and obligations relating to the contract are extinguished (meaning discharged,cancelled or expired); or\u2014The contract is modified such that the modification results in a change in the measurementmodel or the applicable standard for measuring a component of the contract, substantiallychanges the contract boundary, or requires the modified contract to be included in a differentgroup. In such cases, Conduit derecognises the initial contract and recognises the modifiedcontract as a new contract. When a modification is not treated as a derecognition, Conduitrecognises amounts paid or received for the modification with the contract as an adjustmentto the relevant liability for remaining coverage.Contract boundariesThe measurement of a group of reinsurance contracts includes all future cash flows expected toarise within the boundary of each contract in the group. Cash flows are within the boundary of areinsurance contract if they arise from substantive rights and obligations that exist during thereporting period in which Conduit can compel the cedant to pay the premiums, or in whichConduit has a substantive obligation to provide the cedant with services. A substantive obligationto provide services ends when Conduit has the practical ability to reassess the risks of the cedantand, as a result, can set a price of level of benefits that fully reflects those risks. Where Conduitissues multi-year contracts and does not have the ability to re-price on each policy anniversarythe contract is considered one contract and therefore future cash flows from each of the annualperiods are considered on initial recognition.For ceded reinsurance contracts the cash flows are within the boundary of the contract ifConduit has a substantive right to receive services or if Conduit is compelled to pay premiumsto the reinsurer. The substantive right to receive services from the reinsurer ends when:\u2014The reinsurer has the practical ability to reassess the risks transferred to it and can set a priceof level of benefits that fully reflects those risks; or\u2014The reinsurer has a substantive right to terminate the coverage.Conduit assesses the contract boundary at initial recognition and at each subsequent reportingdate to include the effects of changes in circumstances on Conduit\u2019s substantive rights andobligations. The assessment of the contract boundary, which defines the future cash flows thatare included in the measurement of the contract, requires judgement and consideration ofConduit's substantive rights and obligations. Conduit issues risk-attaching reinsurance contractswhich provide reinsurance coverage to underlying contracts issued within the terms of thecontract. While the contracts can have an annual term the contract boundary is assessed withconsideration of the coverage period of the underlying contracts. Contracts that cover claimsfrom underlying contracts within the contract period, loss-occurring contracts, are typicallyannual term. Where contracts contain multi-year terms, Conduit exercises judgement on whetherprovisions within the contract allow cancellation or re-pricing at each anniversary of the contract.Measurement \u2013 Liability for remaining coverageOn initial recognition of each group of contracts, the carrying amount of the liability for remainingcoverage is measured as the premiums received on initial recognition, if any, minus anyreinsurance acquisition expense cash flows allocated to the group of contracts and any amountsarising from the derecognition of the prepaid reinsurance acquisition expense cash flows asset.Conduit has chosen not to expense reinsurance acquisition expense cash flows on contracts withcoverage of one year or less when they are incurred in order to apply a consistent treatment ofreinsurance acquisition expense cash flows for all contracts, regardless of the length of coverage.Subsequently, at the end of each reporting period, the liability for remaining coverage is:\u2014Increased by any premiums received in the period;\u2014Decreased for reinsurance acquisition expense cash flows paid in the period;\u2014Decreased for the amounts of expected premium cash flows recognised as reinsurancerevenue for the services provided in the period;\u2014Increased for the amortisation of reinsurance acquisition expense cash flows in the periodrecognised as reinsurance service expenses; and\u2014Decreased for any non-distinct investment component paid or transferred to the liabilityfor incurred claims.Conduit has elected not to adjust the liability for remaining coverage for the time value of moneyas its reinsurance contracts do not contain a significant financing component.Conduit measures the reinsurance asset for remaining coverage for its ceded reinsurancecontracts that it holds on the same basis as reinsurance contracts issued, adapted to reflect thefeatures that differ between contracts issued versus contracts held.Reinsurance revenue recognised in the period is based on the total premium cash flows expectedto be received over the lifetime of the contract, net of any deductions that are paid to the cedant.The amount of total expected revenue from a contract recognised in the period is dependent onthe type of reinsurance contract, as discussed below.Excess of loss contractsFor the majority of excess of loss contracts, expected premium cash flows are assessed based onthe minimum and deposit or flat premium, as defined in the contract. Subsequent adjustments tothe minimum and deposit premium are assessed in the period in which they are determined. Forexcess of loss contracts where no deposit is specified in the contract, premium cash flows areassessed based on estimates of premiums provided by the ceding company. Subsequentadjustments, based on reports of actual premium by ceding companies, or revisions in estimates,are assessed in the period in which they are determined. For multi-year policies that are payablein annual instalments, where the reinsured has the sole ability to cancel, the total expectedpremium cash flows for all annual periods are assessed at the inception of the contract. Whereunilateral cancellation by the reinsurer exists at each anniversary of the contract the annualperiods are assessed as separate contracts.Reinsurance revenue for excess of loss contracts is generally recognised evenly over the termof the underlying risk period of the reinsurance contract, except where the period of risk differssignificantly from the contract period. In these circumstances, reinsurance revenue is recognisedover the period of risk in proportion to the amount of reinsurance protection provided. Wherecontract terms require the reinstatement of coverage after a ceding company\u2019s loss, as thereinstatement is contingent on the loss, the estimated mandatory reinstatement premiums arerecorded within reinsurance service expenses.Proportional contractsPremium cash flows for proportional contracts are assessed based on estimates of ultimatepremiums provided by the ceding company, supplemented by management's estimates ofpremiums based on its experience with the ceding company, familiarity with each market, the timingof the reported information and its understanding of the characteristics of each class of business.Initial estimates of premium cash flows are assessed in the period in which the contract incepts, orthe period in which the contract is bound, if later. Contracts written on a \u2018risks-attaching\u2019 basis coverclaims which attach to the underlying reinsurance policy written during the term of the respectivepolicy. Reinsurance revenue on such policies generally extend beyond the original term of thecontract. Subsequent adjustments, based on reports of actual premium by the ceding company,or revisions in estimates, are assessed in the period in which they are determined.Reinsurance acquisition expense cash flowsReinsurance acquisition expense cash flows represent the cash flows that arise from the costof selling and underwriting a group of reinsurance contracts and include:\u2014Contract specific costs, such as brokerage;\u2014Operating expenses that are incurred in relation to the fulfilment of reinsurance contracts; and\u2014An allocation of fixed and variable overheads.Reinsurance acquisition expenses are deferred over the period in which the related premiums areearned to the extent they are recoverable out of expected future revenue margins andrecognised within reinsurance service expenses.Commissions that are paid to cedants, such as ceding commissions, are not treated asreinsurance acquisition expense cash flows as they do not relate to a service. Such commissionsare treated as a reduction in the expected premium recognised as reinsurance revenue.Ceded reinsurance expensesCeded reinsurance is purchased in the normal course of business to increase capital capacity orto limit the impact of individual risk losses and loss events impacting multiple cedants, such asnatural-catastrophes, or both. Conduit may purchase ceded reinsurance on both an excess of lossand a proportional basis, and may supplement this with the use of ceded reinsurance cover linkedto the issuance of catastrophe bonds or other capital market products. Ceded reinsurancepremiums are recognised as ceded reinsurance expenses in the same manner as reinsurancecontracts issued, depending on the terms of the contract. Ceding commissions received arededucted from the premium paid that is recognised in ceded reinsurance expenses. Otherexpenses incurred in the placing of ceded reinsurance contracts that are in relation to a serviceby a third party, such as brokerage, are recognised in ceded reinsurance expenses.Measurement \u2013 Liability for incurred claimsThe liability for incurred claims represents the estimated ultimate cost of settling all reinsuranceclaims arising from events that have occurred up to the end of the reporting period, including theoperating costs that are expected to be incurred in the course of settling such claims,reinstatement premiums on specific loss events, profit commissions and similar expenses that arecontingent on claims plus a provision for IBNR. The liability for incurred claims is derived from theestimated fulfilment cash flows relating to expected claims. The fulfilment cash flows incorporate,in an unbiased way, all reasonable and supportable information available, without undue cost oreffort, about the amount, timing and uncertainty of those future cash flows. They also include anexplicit adjustment for non-financial risk, the risk adjustment. Estimates of future cash flows forincurred claims are discounted on initial recognition and then re-measured to current rates as atthe reporting date.Cash flows for outstanding losses are estimated initially on the basis of reported losses receivedfrom cedants. Cash flows for ACRs are determined where management\u2019s expectation of theultimate cost of the reported loss is greater than that reported. Estimated cash flows for IBNRmay also consist of a provision for additional development in excess of losses reported bycedants, as well as a provision for losses which have occurred but have not yet been reportedby cedants.Cash flows for IBNR are estimated initially using expected loss and loss adjustment expenseratios which are selected based on information derived by underwriters and actuaries during theinitial pricing of the business. These estimates are reviewed regularly and, as experience developsand new information is received, the cash flows are adjusted as necessary. As actual lossinformation is reported, and Conduit develops its own loss experience, management will usevarious actuarial methods as well as a combination of management\u2019s judgement and experience,historical reinsurance industry loss experience and estimates of pricing adequacy trends toestimate cash flows for IBNR.The estimation of the liability for incurred claims is a complex process which incorporates asignificant amount of judgement. It is reasonably possible that uncertainties in the reservingprocess, delays in cedants reporting losses to Conduit, together with the potential for unforeseenadverse developments, could lead to a material change in the liability for incurred claims.Any amounts recoverable from reinsurers are estimated using the same methodology as for theunderlying losses except for the requirement under IFRS 17 to assess the ceded reinsurancerecovery cash flows for the effect of any risk of non-performance, including expected creditlosses. Management monitors the creditworthiness of its reinsurers on an ongoing basis andassesses any reinsurance assets for the risk of non-performance, with a provision for non-performance risk being recognised as an expense in the period in which it is determined.Presentation of reinsurance contractsReinsurance assets and liabilitiesThe asset or liability for a portfolio of reinsurance contracts is the net position of both the liabilityfor remaining coverage and the liability for incurred claims. Whether a portfolio is in a liability orasset position is typically impacted by the timing of cash flows received versus cash flows paid.Conduit presents separately in the consolidated balance sheet portfolios of reinsurance contractsissued and held that are in an asset position and those that are in a liability position.All reinsurance contract assets and liabilities are deemed monetary assets and liabilities and arerevalued at period end exchange rates.Reinsurance revenueReinsurance revenue in the consolidated statement of comprehensive income (loss) is theamount of expected premium cash flows, net of any deductions paid to the cedant and excludingany non-distinct investment component. Conduit allocates the expected premium receipts toeach period of coverage on the basis of passage of time or the expected risk pattern if it differssignificantly from the passage of time.Reinsurance service expensesReinsurance service expenses in the consolidated statement of comprehensive income (loss)includes changes in the liability for incurred claims that do not arise from the application ofdiscount rates, being recognition and amortisation of any loss components, amortisation ofreinsurance acquisition expense cash flows and other attributable operating expenses.Ceded reinsurance income and expensesConduit has elected to present the income and expenses from ceded reinsurance contractsseparately in the consolidated statement of comprehensive income (loss). Ceded reinsuranceexpenses represent the total expected ceded premiums and other amounts, that are notcontingent on recoveries, payable to the reinsurer. Conduit recognises ceded reinsuranceexpenses based on the passage of time over the coverage period of a group of contracts orexpected risk pattern. Income from ceded reinsurance contracts includes expected recoverieson incurred claims, changes in expected recoveries related to past service, the provision for theeffects of changes in risk of reinsurer non-performance plus other amounts that are contingenton recoveries, such as ceded profit commissions payable to the reinsured.Net reinsurance finance income (expense)Reinsurance finance income (expense) includes the changes in the carrying amounts ofreinsurance and ceded reinsurance assets and liabilities arising from the unwind of discountrecognised in prior periods and the effects of remeasuring to current discount rates plus otherfinancial assumptions. Conduit has elected to disaggregate the changes in the risk adjustmentfor the time value of money and present in net reinsurance finance income (expense).Conduit has chosen not to disaggregate finance income (expense) between other comprehensiveincome (OCI) and comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52441": { "value": "Financial instrumentsCash and cash equivalentsCash and cash equivalents include cash in hand, deposits held on call with banks, money marketfunds, and other short-term highly liquid investments with a maturity of three months or less atthe date of purchase. Carrying amounts approximate fair value due to the short-term nature andhigh liquidity of the instruments.InvestmentsConduit\u2019s fixed maturity securities portfolio meets the requirements for mandatory classificationas FVTPL and is carried at estimated fair value in the consolidated balance sheet. Theclassification of financial assets is determined at the time of initial purchase. A financial asset isclassified at FVTPL if it is held within a business model that is managed and evaluated on a fairvalue basis or if acquired principally for the purpose of selling in the short term, or if it forms partof a portfolio of financial assets in which there is evidence of short-term profit taking.Presentation of these securities in the FVTPL category is consistent with how managementmonitors and evaluates the performance of these securities on a fair value basis.Regular way purchases and sales of investments are recognised at estimated fair value on thetrade date, and are subsequently carried at estimated fair value. Balances pending settlement arereflected in the consolidated balance sheet in other assets or other payables. The estimated fairvalue of Conduit\u2019s fixed maturity securities portfolio is determined based on bid prices fromrecognised exchanges, broker-dealers, recognised indices or pricing vendors. Changes inestimated fair value of investments classified as FVTPL are recognised in the consolidatedstatement of comprehensive income (loss) within net unrealised gains (losses) on investments.Investments are derecognised when Conduit has transferred substantially all the risks andrewards of ownership. On derecognition of an investment held at FVTPL, previously recordedunrealised gains and losses are recycled from net unrealised gains (losses) on investments to netrealised gains (losses) on investments.Interest income, amortisation and accretion of premiums and discounts on fixed maturitysecurities are calculated using the effective interest rate method and recognised in netinvestment income. The carrying value of accrued interest income approximates estimated fairvalue due to its short-term nature and high liquidity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52442": { "value": "Financial instrumentsCash and cash equivalentsCash and cash equivalents include cash in hand, deposits held on call with banks, money marketfunds, and other short-term highly liquid investments with a maturity of three months or less atthe date of purchase. Carrying amounts approximate fair value due to the short-term nature andhigh liquidity of the instruments.InvestmentsConduit\u2019s fixed maturity securities portfolio meets the requirements for mandatory classificationas FVTPL and is carried at estimated fair value in the consolidated balance sheet. Theclassification of financial assets is determined at the time of initial purchase. A financial asset isclassified at FVTPL if it is held within a business model that is managed and evaluated on a fairvalue basis or if acquired principally for the purpose of selling in the short term, or if it forms partof a portfolio of financial assets in which there is evidence of short-term profit taking.Presentation of these securities in the FVTPL category is consistent with how managementmonitors and evaluates the performance of these securities on a fair value basis.Regular way purchases and sales of investments are recognised at estimated fair value on thetrade date, and are subsequently carried at estimated fair value. Balances pending settlement arereflected in the consolidated balance sheet in other assets or other payables. The estimated fairvalue of Conduit\u2019s fixed maturity securities portfolio is determined based on bid prices fromrecognised exchanges, broker-dealers, recognised indices or pricing vendors. Changes inestimated fair value of investments classified as FVTPL are recognised in the consolidatedstatement of comprehensive income (loss) within net unrealised gains (losses) on investments.Investments are derecognised when Conduit has transferred substantially all the risks andrewards of ownership. On derecognition of an investment held at FVTPL, previously recordedunrealised gains and losses are recycled from net unrealised gains (losses) on investments to netrealised gains (losses) on investments.Interest income, amortisation and accretion of premiums and discounts on fixed maturitysecurities are calculated using the effective interest rate method and recognised in netinvestment income. The carrying value of accrued interest income approximates estimated fairvalue due to its short-term nature and high liquidity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52561": { "value": "Investments are derecognised when Conduit has transferred substantially all the risks andrewards of ownership. On derecognition of an investment held at FVTPL, previously recordedunrealised gains and losses are recycled from net unrealised gains (losses) on investments to netrealised gains (losses) on investments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52608": { "value": "LeasesConduit recognises a right-of-use asset and a lease liability at the lease commencement date.The right-of-use asset is initially measured at cost, which comprises the initial measurement ofthe corresponding lease liability adjusted for any lease payments made at or before thecommencement date, plus any initial direct costs incurred and an estimate of any costs to beincurred at the expiration of the lease agreement.Right-of-use assets are subsequently measured at cost less accumulated depreciation and anyimpairment losses. Straight-line depreciation is calculated from the commencement date of thelease to the earlier of either the end date of the lease term or the useful life of the underlying asset.The lease liability is initially measured at the present value of the future lease payments at thelease commencement date. Lease payments are discounted using the interest rate implicit in thelease or, if that rate cannot be readily determined, Conduit's incremental borrowing rate. Leasepayments included in the measurement of the lease liability include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments thatdepend on an index or a rate, and amounts expected to be paid under residual value guarantees.The lease liability is subsequently measured by increasing the lease carrying amount to reflect theinterest due on the lease liability using the effective interest rate method and reducing thecarrying amount to reflect the lease payments made. Conduit re-measures the lease liability andthe related right-of-use asset whenever there is a change in future lease payments arising froma change in index or rate, if Conduit changes its assessment of whether it will exercise a purchase,extension or termination option or if there is a revised in-substance fixed lease payment.Right-of-use assets and lease liabilities are presented as separate financial statement line items inthe consolidated balance sheet.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52917": { "value": "Employee benefitsEquity-based incentivesConduit currently operates a MIP under which shares are subscribed for or nil cost options aregranted. The fair value of the instruments granted is estimated on the date of grant. Theestimated fair value is recognised as an expense pro-rata over the vesting period of theinstrument, adjusted for the impact of any non-market vesting conditions. No adjustment tovesting assumptions is made in respect of market vesting conditions.Conduit also previously established a DSBP. A percentage of each employee's bonus isautomatically deferred into shares as nil cost options. These nil cost awards vest annually inseparate equal tranches over a three-year period from the date of grant and do not haveassociated performance criteria attached to the awards. These awards accrue dividendequivalents for all dividends declared where the record date falls between the grant date anddate of exercise, and are paid at the time of exercise.During 2023 Conduit established an LTIP. These nil cost awards granted to staff vest over a three-year period from the date of grant and do not have associated performance criteria attached tothe awards. These awards accrue dividend equivalents for all dividends declared where the recorddate falls between the grant date and date of exercise, and are paid at the time of exercise.At each balance sheet date, Conduit revises its estimate of the number of instruments that areexpected to become exercisable. It recognises the impact of the revision of original estimates, ifany, as equity-based incentive expense in the consolidated statement of comprehensive income(loss), and a corresponding adjustment is made to other reserves in shareholders\u2019 equity over theremaining vesting period.On exercise, the differences between the expense charged to the consolidated statement ofcomprehensive income (loss) and the actual cost to Conduit, if any, is transferred to otherreserves in shareholders\u2019 equity.PensionsConduit\u2019s pension plans are based on defined contributions or equivalent cash in lieu, subject toapplicable law and local market standards. On payment of contributions to the plans or cash inlieu there is no further obligation to Conduit. Contributions or payments of cash in lieu arerecognised as employee benefits in the consolidated statement of comprehensive income (loss)in the period when the services are rendered.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53288": { "value": "TaxIncome tax on the profit or loss for the period comprises current and deferred tax. Current taxis the expected tax payable on the taxable income for the year using tax rates enacted orsubstantively enacted at the year-end reporting date and any adjustments to tax payable inrespect of prior periods.Deferred tax is provided, using the liability method, on temporary differences arising between thetax bases of assets and liabilities and their carrying amounts in the financial statements. Theamount of deferred tax provided is based on the expected manner of realisation or settlement ofthe carrying amount of the assets and liabilities, using tax rates enacted or substantively enactedat the reporting date. Deferred tax assets are recognised in the consolidated balance sheet to theextent that it is probable that future taxable profit will be available against which the temporarydifferences can be utilised.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53300": { "value": "Deferred tax is provided, using the liability method, on temporary differences arising between thetax bases of assets and liabilities and their carrying amounts in the financial statements. Theamount of deferred tax provided is based on the expected manner of realisation or settlement ofthe carrying amount of the assets and liabilities, using tax rates enacted or substantively enactedat the reporting date. Deferred tax assets are recognised in the consolidated balance sheet to theextent that it is probable that future taxable profit will be available against which the temporarydifferences can be utilised.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53316": { "value": "Own sharesOwn shares include shares repurchased under share repurchase authorisations and held intreasury, plus shares purchased and held in trust, for the purposes of employee equity-basedincentive schemes. Own shares are deducted from shareholders\u2019 equity. No gain or loss isrecognised on the purchase, sale, cancellation or issue of own shares and any consideration paidor received is recognised directly in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53360": { "value": "Share capital and issuance costsShares are classified as shareholders' equity if there is no obligation to transfer cash or otherfinancial assets. Transaction costs that are attributable to the issuance of new shares are treatedas a deduction from equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53382": { "value": "
Risk disclosures
Introduction
Conduit is exposed to risks from several sources, classified into six primary risk categories. The
primary risk categories are: (a) reinsurance risk; (b) market risk; (c) liquidity risk; (d) credit risk;
(e) operational risk; and (f) strategic risk. These are discussed in detail on the following pages.
The primary risk to Conduit is reinsurance risk.
The Board is responsible for determining the nature and extent of the principal risks Conduit is
willing to take in achieving its strategic objectives and should maintain sound risk management
and internal control systems. To this end, the Board has established various committees to
support the execution of its responsibilities and has reviewed the committee structures at CRL.
The Board, and committees thereof, define the risk preferences and appetites within which
management is authorised to operate.
The risk function is responsible for supporting the Board, and the CRL Board, with the day-to-day
oversight of the risks that Conduit seeks or is exposed to in pursuit of its strategic objectives, and
the satisfaction of certain regulatory risk management expectations relevant to CRL. The
framework under which risks are managed contemplates risk appetite and tolerance constraints.
Risk appetite is prescribed by the Board and is reviewed at least annually, with consideration of
the financial and operational capacity of Conduit. The use of financial capacity in this context
relates to calculated or modelled capital requirements, based on residual unmitigated risk
exposures. Current capital requirements are determined by reference to rating agency and
regulatory capital requirements.
Day-to-day management of risk is the responsibility of management, operating within the defined
appetite and tolerances. The risk framework prescribes a standardised approach to the
management of risk, oversight and challenge by the risk function and independent assurance
provided by the internal audit function. The risk framework also addresses the reporting of risks,
emerging risks, risk events and compliance with risk appetite and tolerance statements to
executive management and the Board, and relevant board committees, of CHL and CRL. To
ensure transparency and accountability of the business for all independent Non-Executive
Directors, four Independent Non-Executive Directors from the Board have been appointed to the
Board of CRL. Furthermore, the Board is invited to attend operating entity board level meetings
and see all minutes and records of such operating entity board and committee meetings.
Climate change
Conduit is exposed to risks associated with climate change but also potential opportunities
arising from that risk. Risks from climate change can include physical risk and transition risk.
Physical risks are those relating to the physical impacts of climate change, which can be from
increased frequency and/or severity of climate-related events, or structural, due to longer-term
shifts in climate patterns. Transition risks are those relating to the transition to a lower carbon
economy and include risks such as policy and legal risk, technology risk, market risk and
reputational risk. The potential financial impact from these risks is mitigated by Conduit\u2019s
strategic and risk management policies.
Global tax reform
Conduit continues to monitor developments in local and international taxation. On 27 December
2023 the Bermuda government enacted legislation, the Bermuda Corporate Income Tax Act of
2023 (Bermuda CIT), into law. CHL, CSL, CML and CRL are currently not in scope for this new
legislation. While certain implications of the new Bermuda CIT remain uncertain, Conduit's current
assessment is that it does not meet the criteria to pay any taxes under the Bermuda CIT. If
Conduit were to meet the Bermuda CIT criteria in the future, it is likely that an exemption will be
available for the first five years in which the tax would otherwise apply.
The international tax agenda continues to provide uncertainty to companies. Conduit has a
limited international footprint and underwrites from a single balance sheet and a single
jurisdiction, which limits complexity. As CHL, CSL, CML and CRL do not meet the qualifying
criteria under Bermuda CIT, they continue to benefit from an existing undertaking from the
Bermuda government which exempts them from all Bermuda local income, withholding and
capital gains taxes until 31 March 2035.
a.
Reinsurance risk
Conduit underwrites both short-tail and long-tail reinsurance contracts on a worldwide basis.
These reinsurance contracts transfer insurance risk, including risks exposed to both natural and
man-made catastrophes, and risk and liability losses. The risk in connection with underwriting
reinsurance contracts is, in the event of a covered loss, whether the premiums will be sufficient to
meet the associated loss payments and expenses. The underwriters evaluate and estimate the
level of premiums sufficient to cover expected losses, expenses and profitability through a
combination of sophisticated risk modelling tools, past experience and knowledge of loss events,
current industry trends and broader economic indicators. In order to ensure appropriate
reinsurance risk selection and limits on the concentration and diversification of the aggregate
portfolio, Conduit has established risk management and internal control systems to evaluate and
assess the expected losses of each individual contract, class of business, geographic region and
the aggregate portfolio.
These controls, include, but are not limited to:
\u2014
A five-year strategic plan is produced that defines the over-riding business goals that
management and the Board aim to achieve;
\u2014
A detailed business plan is produced annually and considers current market conditions and
the risk-adjusted profitability of the underwriting portfolio;
\u2014
Conduit's internal capital requirements consider the probability and magnitude of reinsurance
losses varying adversely from the expected losses considered during the underwriting and
subsequent reserving processes;
\u2014
Forecasts are produced periodically to assess the progress toward the business plan and the
strategic plan;
\u2014
Each underwriter has a clearly defined limit of underwriting authority;
\u2014
Each contract underwritten is subject to a pre-bind peer review;
\u2014
An underwriting roundtable meeting, typically held daily, where deal flow, pricing and
opportunities are discussed;
\u2014
Pricing models are used in all areas of the underwriting process and are stored centrally in our
pricing platform;
\u2014
Risk appetite and tolerance statements have been established and the CRO reports quarterly
on adherence;
\u2014
A number of modelling tools are used to model catastrophes and calculate the associated
expected losses; and
\u2014
Outwards reinsurance is purchased to mitigate both frequency and severity of losses, and to
protect Conduit\u2019s capital base.
Operating segments
The underwriting business is comprised of three principal divisions: Property, Casualty and Specialty. These divisions are also considered to be Conduit's operating segments. Details of each operating
segment and reinsurance revenue by geographic region and operating segment are as follows:
2023
2022
Property
Casualty
Specialty
Total
Total
Property
Casualty
Specialty
Total
Total
Year ended 31 December
$m
$m
$m
$m
%
$m
$m
$m
$m
%
US
198.0
118.3
20.6
336.9
53.2
109.8
104.0
3.9
217.7
55.5
Worldwide
101.2
23.4
74.7
199.3
31.5
56.5
14.9
51.4
122.8
31.3
Europe
21.7
28.2
19.7
69.6
11.0
15.7
16.2
7.0
38.9
9.9
Other
24.3
1.9
1.0
27.2
4.3
10.8
1.6
0.6
13.0
3.3
Reinsurance revenue
345.2
171.8
116.0
633.0
100.0
192.8
136.7
62.9
392.4
100.0
Property reinsurance
Conduit is exposed to large natural-catastrophe losses, such as windstorm and earthquake losses,
primarily from assuming risks associated with property treaties. Exposure to natural-catastrophe
events is controlled and measured by managing to predefined limits within stochastic modelling
and deterministic accumulations across classes per geographic zone and peril. The accuracy of
these analyses is limited by the quality of data and the effectiveness of the modelling. It is
possible that a catastrophic event significantly exceeds the expected modelled event loss.
Natural-catastrophe risk is written across both the US and internationally on an excess of loss
and capped quota share basis. Reinsurance structures are offered typically in respect of peril,
geography and probability of activation or exhaustion.
Property per risk treaties are offered with the strategy to minimise natural-catastrophe exposure,
focusing on fire risk. This is considered by both natural-catastrophe specific metrics, treaty
conditions and excess of loss structure.
Ceded reinsurance may be purchased to mitigate exposures to large natural-catastrophe losses.
Ceded reinsurance is typically purchased on an ultimate net loss excess of loss basis, however
industry loss warranties, catastrophe bonds issuances, or proportional treaty arrangements may
also be utilised.
Casualty reinsurance
Conduit underwrites a balanced portfolio of casualty classes of business, comprised of both
excess of loss and proportional contracts, on a worldwide basis.
Casualty claims tend to take longer to be reported and ultimately settled than physical damage
risks. Conduit typically maintains a liability for incurred claims for casualty classes of business
over a longer period of time than for the property and specialty classes of business where the
costs of claims are generally known and settled within a shorter time frame.
Conduit will purchase ceded reinsurance to protect against any \u2018clash\u2019 between losses arising
in its casualty portfolio.
The sub-classes of casualty business include directors and officers liability, financial institutions
liability, general liability for multiple sub-classes and, on an excess and umbrella basis, medical
malpractice, professional liability and transactional liability. Conduit has limited appetite for, and
generally avoids, workers compensation, standalone auto and cyber treaties.
Directors and officers liability
Directors and officers liability policies offer protection for company managers and directors and
officers against claims that may arise in the normal course of operations. Coverage includes legal
expenses and liability to shareholders, bondholders, creditors or others owing to actions or
omissions by a director or officer of a private or public corporation, or not-for-profit organisation.
Financial institutions liability
Financial institutions coverage may cover risks such as computer and commercial crime,
professional indemnity and civil liability.
General liability
General liability commonly provides cover for losses arising from the legal liability of an original
insured and statutory liability in the case of employers\u2019 liability which result in bodily injury or
disease to third parties or physical damage to third-party property. Conduit offers a wide range
of general liability reinsurance products including contractors general liability, excess general
liability, umbrella, energy and environmental.
Medical malpractice
Medical malpractice reinsurance generally covers professional liability and errors and omissions
specifically in the healthcare industry, protecting physicians and other healthcare professionals
against claims of negligent acts or injury of patients under their care. Medical malpractice
reinsurance does not cover intentional or criminal acts.
Professional liability
Professional liability generally provides coverage for third-party losses resulting from legal
liability or civil liability or negligence, errors or omissions or wrongful acts arising from the
provision of, or failure to provide, professional services by an original insured. Sub-classes of this
business would include lawyers, accountants, architects and engineers, errors and omissions, plus
miscellaneous professional liability.
Transactional liability
Transactional liability reinsurance is used by parties to various business transactions, such as
mergers, acquisitions and divestitures, to transfer certain transaction-related risks to the
reinsurance market. There can be a broad range of risks covered, including warranty, litigation,
pension and tax uncertainties and employment matters.
Specialty reinsurance
Conduit's specialty classes of business are written on both an excess of loss and proportional
basis and can provide reinsurance coverage against physical damage (short-tail) or against legal
liability (long-tail) losses. Although specialty classes of business are exposed to natural-
catastrophe risk, it is generally to a lesser extent than property classes of business. They are more
likely to be affected by specific large loss events such as accidents, collisions, fires and similar
man-made catastrophe events. Specialty classes of business are highly diverse in nature and
require specific market expertise and experience. The specialty classes of business include, but
are not limited to, aviation, energy, engineering and construction, environmental, marine,
renewables, political violence and terrorism and are offered on both a specific and a whole
account basis.
Conduit purchases ceded reinsurance protection to reduce exposure to both large risk losses and
an accumulation of smaller claims arising from any one event. Ceded reinsurance is typically
purchased on an excess of loss basis, but, from time to time, proportional arrangements may be
entered into.
Aviation
The aviation class of business provides cover to the insurers of airlines, aircraft, airports, aircraft
manufacturers and aviation related products, and includes cover for the aircraft themselves as
well as losses arising from passenger and third-party liability claims against airlines and/or
operators and/or manufacturers.
Energy
The energy class of business provides reinsurance cover for a global spread of accounts that
includes risks such as downstream energy, midstream energy, upstream energy, energy liability,
construction and natural perils related coverages such as Gulf of Mexico wind and hurricane
programmes. Policies typically cover legal liability of an insured and property for physical
damage (including natural-catastrophe), machinery breakdown perils and consequential business
interruption exposure. Loss limits are set at a level commensurate with the modelled estimated
maximum loss scenario.
Engineering and construction
The class covers a wide range of products falling under related property and business income
protection on a worldwide basis. These products include, but are not limited to, contractors\u2019 all
risks, erection all risks, plant and equipment, machinery breakdown and loss of profits. Projects
range from small bespoke to large civil engineering constructions. The main hazards are fire and
explosion, theft, collapse and natural perils such as earthquake, windstorm and flood.
Environmental
Environmental products generally provide cover relating to the environmental and energy
casualty classes with regard to pollution. The related sectors typically include energy,
construction, and industrial which includes both commercial and residential risks.
Marine
Marine cargo is an international account and covers the reinsurance of commodities or goods in
transit. Typically, transit cover is provided on an all-risks basis for marine perils for the full value
of the goods concerned. Static cover is also provided for losses to cargo, from both elemental
and non-elemental causes. In addition, the cargo account can include for example, fine art, vault
risks, artwork on exhibition and marine war and terrorism business relating to cargo in the
ordinary course of transit.
Marine liability commonly provides cover for legal liability for losses arising from the operation
of marine and offshore related assets including but not limited to the reinsurance of the
International Group of Protection and Indemnity Clubs, the operation and management of ships
and vessels, cargo, and marine builders' risks covering the building of ocean-going vessels and
offshore assets.
The marine hull class generally consists of worldwide coverage spanning physical damage, hull
and machinery breakdown, loss of hire and mortgagees\u2019 interests for a range of maritime vessels
from cargo and passenger ships to private pleasure craft. Products typically cover both risk and
catastrophe exposures.
Renewables
The class covers a wide range of tailored solutions globally. The class includes offshore and
onshore wind power, ground and rooftop solar power plus bioenergy fuels and associated
operations. The risks exposed are quite unique, from difficult construction operations to installing
complex equipment that is routinely exposed to natural hazards. Policies typically include cover
for physical damage, legal liability, machinery breakdown and business interruption for both
construction and operational phases.
Political violence and terrorism
Political violence and terrorism coverage is provided for US and worldwide property risks, but
typically excluding nuclear, chemical, biological and cyber coverage in most territories.
Whole account
Coverage is generally provided on a worldwide basis and covers a broad spectrum of the
cedants risks under a single policy. The classes of business covered under a whole account
reinsurance policy can include property, specialty and casualty classes of business including
commercial and personal automobile, general liability, workers\u2019 compensation, employers\u2019 liability,
excess casualty and umbrella, as well as selected professional liability coverage.
Ceded reinsurance
Ceded reinsurance is purchased in the normal course of business to increase capital capacity,
limit the impact of individual risk losses and loss events impacting multiple cedants (such as
natural-catastrophes), or both. Ceded reinsurance may also be purchased from time to time to
optimise the risk-adjusted return of Conduit's aggregate underwriting portfolio. Conduit may
purchase ceded reinsurance on both an excess of loss and proportional basis, and may also use
reinsurance linked to catastrophe bonds or other capital market products. The mix of ceded
reinsurance coverage is dependent on specific loss mitigation requirements, market conditions
and available capacity. In certain market conditions, Conduit may deem it more economic to hold
capital than purchase ceded reinsurance. Ceded reinsurance does not relieve Conduit of its
obligations to policyholders. Conduit is exposed to reinsurance risk where ceded reinsurance
contracts put in place to reduce gross reinsurance risk do not perform as anticipated, result in
coverage disputes or prove inadequate in terms of the limits purchased. Failure of a ceded
reinsurer to pay a valid claim is considered a credit risk which is detailed in the credit risk section
below. Ceded reinsurance coverage is not intended to be available to meet all potential loss
circumstances. Conduit will retain certain losses, as the cover purchased is unlikely to transfer the
totality of Conduit\u2019s exposure. Any loss amount which exceeds the ceded reinsurance coverage
purchased would be retained by Conduit. Some ceded reinsurance policies have limited
reinstatements, therefore the number of claims which may be recovered on second, and
subsequent loss circumstances is limited.
Under Conduit\u2019s ceded reinsurance security policy, ceded reinsurers are assessed and approved
based on their financial strength ratings, among other factors. These decisions are regularly
reviewed as an integral part of the business planning and performance monitoring process.
The management Counterparty Security Committee examines and approves all Conduit\u2019s ceded
reinsurers to ensure that they possess suitable security.
Fulfilment cash flows
Fulfilment cash flows consist of:
\u2014
The estimates of future cash flows required in the ultimate settlement of claims;
\u2014
An adjustment for the time value of money; and
\u2014
A risk adjustment for non-financial risk
Estimates of future cash flows
A significant and critical judgement and estimate made by management is the estimation of
future cash flows in relation to ultimate claims settlements. Management estimates, in an
unbiased way, future cash flows to cover its estimated liability for both reported and unreported
claims on events that have occurred up to the latest valuation date, incorporating all reasonable
and supportable information that is available without undue cost or effort. Management uses
methodologies that calculate a point estimate for the ultimate losses, representing management\u2019s
best estimate of ultimate future cash flows. Conduit estimates the future cash flows by taking
outstanding losses, adding an estimate for IBNR and, if deemed necessary, ACRs which represent
Conduit's estimate for losses related to specific contracts that management believes may not be
adequately estimated by the cedant as at that date.
Liabilities for incurred claims are not permitted until the occurrence of an event which may give
rise to a claim. As a result, only provisions applicable to losses that have occurred up to the
reporting date are established, with no allowance for the provision of a contingency liability to
account for expected future losses or for the emergence of new types of latent claims. Claims
arising from future events can be expected to require the establishment of substantial liabilities
from time to time. The estimated timing of the future cash flows is determined by applying cash
flow payment assumptions to the best estimate of ultimate future cash flows.
The reserving process is dependent on management's judgement and is subject to meaningful
uncertainty due to both qualitative and quantitative factors, including, but not limited to: the
nature of the business written, whether it is short-tail or long-tail, whether it is excess of loss or
proportional, the magnitude and timing of loss events, the geographic areas impacted by loss
events, time lags in the reporting process from the original claimant, limited claims data, policy
coverage interpretations, case law, regulatory directives, demand surge and inflation, potential
uncertainties related to reinsurance and ceding company reserving practices, and other factors
inherent in the estimation process for the net ultimate liability for incurred claims.
The judgements and estimates used in establishing future cash flow calculations may be revised
as additional experience or other data becomes available. Future cash flows are also reviewed as
new or improved methodologies are developed and as laws or regulations change. Furthermore,
as a business operating within a broker market, management must rely on loss information
reported to brokers by other insurers and their loss adjusters, who must estimate their own losses
at the policy level, often based on incomplete and changing information. The information
management receives varies by cedant and may include paid losses, estimated case reserves and
an estimated provision for IBNR reserves. Additionally, reserving practices and the quality of data
reporting may vary among ceding companies, which adds further uncertainty to management\u2019s
estimates of the ultimate losses.
Conduit\u2019s internal actuaries review the assumptions and methodologies on a quarterly basis and
develop an actuarial best estimate of Conduit\u2019s future cash flows using the processes outlined
above. The management Reserving Committee reviews the estimate for the liability for incurred
claims on a quarterly basis. The reserves are subject to a semi-annual independent review by
Conduit\u2019s external actuaries. The results of the internal and independent reserve reviews are
presented to the Audit Committee.
Risk adjustment
The risk adjustment for non-financial risk is the compensation that Conduit requires for bearing
the uncertainty about the amount and timing of the cash flows arising from reinsurance
contracts. Conduit determines the risk adjustment at the entity level and allocates to the groups
of reinsurance contracts.
Conduit has estimated the risk adjustment using a margin-based approach. The margins are
calibrated to a targeted confidence interval range using the BMA BSCR risk framework. Conduit
expects that the risk adjustment recognised within the fulfilment cash flow will fall within the
range of the 75th and the 85th percentile, gross and net of ceded reinsurance. Conduit estimates
that the risk adjustment net of ceded reinsurance corresponds to the 82nd percentile as at
31 December 2023 and to the 81st percentile as at 31 December 2022.
Short-tail versus long-tail
Claims relating to short-tail risks are generally reported more promptly than those relating to
long-tail risks. The timeliness of reporting can be affected by such factors as the nature of the
event causing the loss, the location of the loss and whether the losses are from policies in force
with primary insurers or reinsurers.
Excess of loss versus proportional
For excess of loss contracts, management is aided by the fact that each policy has a defined limit
of liability arising from one event. Once that limit has been reached, there is no further exposure
to additional losses from that policy for the same event. For proportional business, an initial
estimated loss and loss expense ratio is generally used. This is based upon information provided
by the ceding company and/or their broker and management\u2019s historical experience of that
treaty, if any, and the estimate is adjusted as actual experience becomes known.
b.
Market risk
Conduit is at risk of loss due to movements in market factors. The main market risks Conduit was
exposed to include:
\u2014
Reinsurance risk;
\u2014
Investment risk; and
\u2014
Currency risk.
Reinsurance risk
Conduit is exposed to reinsurance market risk from several sources, including the following:
\u2014
The advent or continuation of a soft market, which may result in a stabilisation or decline
in premium rates and/or terms and conditions for certain classes, or across all classes;
\u2014
The actions and reactions of key competitors, which may directly result in volatility in
premium volumes and rates, fee levels and other input costs;
\u2014
Market events, including unusual inflation in rates, may result in a limit in the availability of
cover, causing political intervention or national remedies;
\u2014
Failure to maintain broker and cedant relationships, leading to a limited or substandard choice
of risks inconsistent with Conduit\u2019s risk appetite;
\u2014
Changes in laws and regulation, including capital, governance or licensing requirements: and
\u2014
Changes in the geopolitical environment.
The most important method to mitigate reinsurance market risk is to maintain strict underwriting
standards. Conduit manages reinsurance market risk in numerous ways, including the following:
\u2014
Reviews and amends underwriting plans and outlook as necessary;
\u2014
Reduces exposure to, or withdraws from, market sectors where conditions have reached
unattractive levels;
\u2014
Purchases appropriate, cost-effective reinsurance cover to mitigate exposures:
\u2014
Closely monitors changes in rates, terms and conditions and inflation;
\u2014
Ensures through rigorous underwriting criteria that surplus capital does not drive short-term
risk appetite;
\u2014
An underwriting roundtable meeting, typically held daily, where deal flow, pricing and
opportunities are discussed;
\u2014
Holds quarterly management Underwriting Oversight Committee meetings that consider
matters that include underwriting performance for CRL;
\u2014
Holds an annual strategy review meeting;
\u2014
Holds a quarterly Underwriting Committee board meeting that considers matters including
underwriting performance for CRL;
\u2014
Holds a quarterly Risk, Capital and Compliance Committee meeting to review relevant risk and
capital considerations for CRL; and
\u2014
Holds regular meetings with regulators and rating agencies.
Reinsurance finance risk
Estimates of future cash flows for incurred claims are discounted on initial recognition and then
re-measured to current rates as at each reporting date. Reinsurance liabilities and ceded assets
for incurred claims are therefore sensitive to the level of market interest rates. Interest rate risk
on reinsurance contracts is the risk that the value of the future cash flows will fluctuate due to
changes in market interest rates. Movements in interest rates may lead to an adverse impact on
the value of Conduit\u2019s reinsurance contract assets and liabilities. Conduit manages this risk by
monitoring the duration of reinsurance contract cash flows and adopting policies regarding asset
and liability matching to reduce the volatility arising from interest rate movements on assets and
liabilities in the consolidated statement of comprehensive income (loss).
The total reinsurance contract assets and liabilities exposed to interest rate risk are detailed
below:
2023
2022
\"image\"
As at 31 December
Note
$m
$m
Ceded asset for incurred claims
14
42.6
58.5
Liability for incurred claims
14
(592.2)
(391.1)
Total
(549.6)
(332.6)
Discount rates
All future cash flows are discounted using yield curves that are adjusted to reflect the characteristics of the cash flows and the liquidity of the reinsurance contracts. Conduit determines its discount
rates using a bottom-up method of using a risk-free rate, plus an illiquidity premium where applicable. Risk-free rates are determined by reference to the yields published by EIOPA for the relevant,
material currencies. The illiquidity premium is estimated by reference to observable market corporate bond yields.
The annual spot rates, including illiquidity premium, used for the re-measurement of the net liability for incurred claims as at the balance sheet date are shown below for all portfolios:
2023
2022
As at 31 December
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
USD
5.26%
4.22%
4.00%
3.95%
5.57%
4.76%
4.45%
4.25%
EUR
3.86%
2.94%
2.82%
2.89%
3.68%
3.70%
3.63%
3.59%
GBP
5.24%
4.17%
3.86%
3.78%
4.96%
4.83%
4.56%
4.21%
The sensitivity of Conduit's net reinsurance liability for incurred claims to interest rate movements
is detailed below, assuming linear movements in interest rates:
2023
2022
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
17.4
3.2
10.7
3.2
75
13.1
2.4
8.1
2.4
50
8.7
1.6
5.4
1.6
25
4.4
0.8
2.7
0.8
0
-
-
-
-
-25
(4.4)
(0.8)
(2.7)
(0.8)
-50
(8.8)
(1.6)
(5.5)
(1.7)
-75
(13.3)
(2.4)
(8.2)
(2.5)
-100
(17.8)
(3.2)
(11.0)
(3.3)
Investment risk
Movements in investments resulting from changes in interest and inflation rates, credit spreads,
and currency exchange rates, among other factors, may lead to an adverse impact on the value
of Conduit\u2019s investment portfolio. Conduit seeks to invest in issuers with stronger ESG practices
on balance, as it believes that this will also help reduce risk in the portfolio.
The Investment Committee of the CRL Board is responsible for all investment-related decisions
and investment guidelines. The investment guidelines set the parameters within which Conduit\u2019s
external managers must operate. Important parameters of these guidelines include permissible
asset classes, duration ranges, credit quality, permitted currency, maturity, industry sectors,
geographical, sovereign and issuer exposures. Guideline compliance is monitored on a monthly
basis. The portfolio of fixed maturity securities is currently managed by four external managers.
Their performance is monitored on an ongoing basis. Conduit projects the level of funds required
to meet near-term obligations and cash flow needs following extreme events in order to ensure
adequate liquidity is maintained. Conduit also prioritises liquid asset classes with higher credit
quality and shorter duration so that Conduit can meet reinsurance and other near-term
obligations. Conduit has split the portfolio into a short-tail mandate, to better match the property
and specialty classes of business, and a long-tail mandate, to better match the casualty classes of
business and some aspects of the specialty classes of business. The short-tail mandate will be
slightly shorter duration than the long-tail mandate.
Conduit reviews the composition, duration and asset allocation of its investment portfolio on a
regular basis to respond to changes in interest rates and other market conditions. If certain asset
classes are anticipated to produce a higher return within management\u2019s risk tolerance, an
adjustment in asset allocation may be made. Conversely, if the risk profile is expected to move
outside of tolerance levels, adjustments may be made to reduce the risks in the portfolio.
Conduit models various periods of significant stress in order to better understand the investment
portfolio\u2019s risks and exposures. The scenarios represent what could, and most likely will, occur \u2013
albeit not in the exact form of the scenarios, which are based on historic periods of volatility.
Conduit also monitors the portfolio impact of more severe scenarios consisting of extreme shocks.
Conduit focuses on the most significant risks in its investment portfolio which are interest rate
risk, credit risk and liquidity risk, and has built stress testing and risk analytics around these risks
to ensure they are within tolerances and preferences.
Strategic asset allocation reviews will be undertaken periodically to assess Conduit\u2019s overall
investment strategy and to consider alternative asset allocations to achieve the best risk-adjusted
return within Conduit's risk appetite. Any resulting recommendations would be approved by the
appropriate management committee(s) and reported to the Board. The Investment Committee
meets quarterly to ensure that the strategic and tactical investment actions were consistent with
investment risk preferences, appetite, risk and return objectives and tolerances. The investment
risk tolerances have been incorporated into the risk framework.
The investment mix by mandate and sector of Conduit's portfolio of fixed maturity securities
is as follows:
Estimated
Estimated
Estimated
Estimated
Estimated
Estimated
fair value
fair value
fair value
fair value
fair value
fair value
short-tail
long-tail
total
short-tail
long-tail
total
As at 31 December 2023
$m
$m
$m
As at 31 December 2022
$m
$m
$m
Short-term investments
42.0
4.7
46.7
Short-term investments
33.2
4.7
37.9
US treasuries
230.0
113.9
343.9
US treasuries
103.6
106.6
210.2
US agency debt
2.0
1.8
3.8
US agency debt
-
1.8
1.8
US municipals
11.8
7.3
19.1
US municipals
10.0
5.2
15.2
Non-US government and agency
2.0
-
2.0
Non-US government and agency
2.0
-
2.0
Asset-backed
125.4
48.9
174.3
Asset-backed
102.6
61.2
163.8
US government agency mortgage-backed
62.3
59.8
122.1
US government agency mortgage-backed
52.7
47.9
100.6
Non-agency mortgage-backed
11.7
6.6
18.3
Non-agency mortgage-backed
9.8
3.0
12.8
Agency commercial mortgage-backed
7.8
-
7.8
Agency commercial mortgage-backed
3.2
-
3.2
Non-agency commercial mortgage-backed
25.6
31.2
56.8
Non-agency commercial mortgage-backed
21.9
30.8
52.7
Corporate
286.1
157.5
443.6
Corporate
263.6
157.9
421.5
Total
806.7
431.7
1,238.4
Total
602.6
419.1
1,021.7
Corporate and non-US government and agency bonds by country are as follows:
Non-US
Other
government
Financials
industries
and agency
Total
As at 31 December 2023
$m
$m
$m
$m
US
179.0
178.5
-
357.5
UK
22.9
1.6
-
24.5
Canada
16.1
0.9
-
17.0
Other countries
42.9
1.7
2.0
46.6
Total
260.9
182.7
2.0
445.6
Non-US
Other
government
Financials
industries
and agency
Total
As at 31 December 2022
$m
$m
$m
$m
US
140.6
187.7
-
328.3
UK
21.7
5.5
-
27.2
Canada
23.2
0.5
-
23.7
Other countries
35.4
6.9
2.0
44.3
Total
220.9
200.6
2.0
423.5
The sector allocation of corporate bonds is as follows:
2023
2022
As at 31 December
$m
%
$m
%
Financials
260.9
58.8
220.9
52.4
Industrials
161.4
36.4
180.3
42.8
Utilities
21.3
4.8
20.3
4.8
Total
443.6
100.0
421.5
100.0
Conduit\u2019s investment portfolio is comprised of fixed maturity securities and cash and cash
equivalents. Fair values can be impacted by movements in interest rates, credit ratings, exchange
rates, the current economic environment and outlook. The estimated fair value of the portfolio of
fixed maturity securities is generally inversely correlated to movements in market interest rates.
If market interest rates fall, the estimated fair value of Conduit\u2019s portfolio of fixed maturity
securities would tend to rise and vice versa. The sensitivity of the price of fixed maturity
securities to movements in interest rates is indicated by their duration. The greater a security\u2019s
duration, the greater its price volatility to movements in interest rates. The sensitivity of Conduit\u2019s
portfolio of fixed maturity securities to interest rate movements is detailed below, assuming linear
movements in interest rates.
2023
2022
As at 31 December
$m
%
$m
%
Immediate shift in yield (basis points)
100
(32.1)
(2.6)
(23.0)
(2.2)
75
(24.1)
(1.9)
(17.2)
(1.7)
50
(16.0)
(1.3)
(11.5)
(1.1)
25
(8.0)
(0.6)
(5.7)
(0.6)
0
-
-
-
-
-25
9.1
0.7
6.6
0.6
-50
18.3
1.5
13.2
1.3
-75
27.4
2.2
19.7
1.9
-100
36.5
2.9
26.3
2.6
Conduit mitigates interest rate risk on the investment portfolio by establishing and monitoring
duration ranges in its investment guidelines. The duration of the portfolio is matched to the
modelled expected duration of the reinsurance reserves, within a permitted range. The permitted
duration range for the portfolio is between 1.5 and 5 years. The overall duration for the fixed
maturity securities, managed cash and cash equivalents is 2.4 years as at 31 December 2023
(as at 31 December 2022: 2.2 years).
In addition to duration management, Conduit monitors VaR to measure potential losses in the
estimated fair values of its cash and invested assets and to understand and monitor risk. The VaR
calculation is performed using variance/covariance risk modelling. Securities are valued
individually using standard market pricing models. These security valuations serve as the input
to many risk analytics. The principal VaR measure that is produced is an annual VaR at the 99th
percentile confidence level. Under normal conditions, the portfolio is not expected to lose more
than the VaR metric listed below, 99% of the time over a one-year time horizon. The
appropriateness of this measure is considered by the Investment Committee periodically.
Conduit\u2019s annual VaR calculation is as follows:
Currency risk
Conduit is susceptible to fluctuations in rates of foreign exchange, principally between the US dollar and pound sterling and the US dollar and the euro. Even though risks are assumed on a worldwide
basis, they are predominantly denominated in US dollars. Conduit is exposed to currency risk to the extent its assets are denominated in different currencies to its liabilities. Conduit is also exposed to
translation risk on non-monetary assets and liabilities. Foreign currency gains and losses are recorded in the period they occur in the consolidated statement of comprehensive income (loss).
Conduit hedges monetary non-US dollar liabilities primarily with non-US dollar assets but may also use derivatives, such as currency forwards, to mitigate foreign currency exposures. The main
foreign currency exposure relates to its reinsurance and ceded reinsurance assets and liabilities, cash holdings and dividend payable, if applicable.
With the adoption of IFRS 17 all reinsurance and ceded reinsurance assets and liabilities are monetary items and are revalued at period end exchange rates.
The following table summarises the carrying value of all monetary and non-monetary assets and liabilities categorised by Conduit\u2019s main currencies. Prior periods have been restated for the adoption
of IFRS 17:
As at 31 December 2023
USD
$m
GBP
$m
EUR
$m
Other
$m
Total
$m
Total assets
1,427.9
26.3
16.5
25.5
1,496.2
Total liabilities
(438.7)
(20.4)
(29.3)
(20.4)
(508.8)
Net assets (liabilities)
989.2
5.9
(12.8)
5.1
987.4
As at 31 December 2022 (re-stated)
USD
$m
GBP
$m
EUR
Other
Total
$m
$m
$m
Total assets
1,192.9
10.5
4.2
7.0
1,214.6
Total liabilities
(303.3)
(8.9)
(22.4)
(12.8)
(347.4)
Net assets (liabilities)
889.6
1.6
(18.2)
(5.8)
867.2
The impact on profit from a proportional foreign exchange movement of 10.0% against the US dollar at year end spot rates would be an increase or decrease of $0.4 million (31 December 2022:
decrease or increase $1.3 million).
c.
Liquidity risk
Liquidity risk is the risk that cash may not be available to pay obligations when they are due
without incurring unreasonable costs. Conduit's main exposure to liquidity risk is with respect to
its reinsurance and investment activities. Conduit is exposed if proceeds from the sale of financial
assets are not sufficient to fund obligations arising from reinsurance contacts and/or other
liabilities. Conduit can be exposed to fund daily calls on its available investment assets, principally
to settle reinsurance claims and/or to fund trust accounts following a large catastrophe loss, or
other collateral requirements.
Liquidity risk exposures related to reinsurance activities are as follows:
\u2014
Large catastrophic events, or multiple medium-sized events in quick succession, requiring the
payment of high value claims within a short time frame or to fund trust accounts established
to collateralise claims payment liabilities;
\u2014
Failure of cedants to meet their contractual obligations with respect to the timely payment
of premiums; and
\u2014
Failure of Conduit\u2019s ceded reinsurers to meet their contractual obligations to pay claims
within a timely manner.
Liquidity risk exposures related to investment activities are as follows:
\u2014
Adverse market movements and/or a duration mismatch to obligations, resulting
in investments needing to be disposed of at a significant realised loss; and
\u2014
An inability to liquidate investments due to market conditions.
Conduit's investment strategy is to hold high quality, liquid securities sufficient to meet
reinsurance liabilities and other near-term liquidity requirements. Portfolios are specifically
designed to ensure funds are readily available in an extreme event.
The maturity dates of Conduit's portfolio of fixed maturity securities are as follows:
As at 31 December 2023
Short-tail
$m
Long-tail
$m
Total
$m
Fixed maturity securities at FVTPL
Less than one year
174.6
29.9
204.5
Between one and two years
135.3
13.1
148.4
Between two and three years
122.3
47.7
170.0
Between three and four years
29.3
21.5
50.8
Between four and five years
41.1
79.8
120.9
Over five years
71.3
93.2
164.5
Asset-backed and mortgage-backed
232.8
146.5
379.3
Total
806.7
431.7
1,238.4
As at 31 December 2022
Short-tail
$m
Long-tail
$m
Total
$m
Fixed maturity securities at FVTPL
Less than one year
167.9
46.0
213.9
Between one and two years
149.5
37.0
186.5
Between two and three years
54.2
12.5
66.7
Between three and four years
15.8
48.8
64.6
Between four and five years
4.9
21.0
25.9
Over five years
20.1
110.9
131.0
Asset-backed and mortgage-backed
190.2
142.9
333.1
Total
602.6
419.1
1,021.7
The estimated maturity profile of the reinsurance liability for incurred claims and financial liabilities of Conduit is as follows:
Years until liability becomes due \u2013 discounted
2023
2022
Carrying
Less than
One to
Three to
Carrying
Less than
One to
Three to
value
one
three
five
Over five
Total
value
one
three
five
Over five
Total
As at 31 December
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Reinsurance liability for incurred claims
592.2
158.0
231.4
117.3
85.5
592.2
391.1
109.9
160.0
66.1
55.1
391.1
Other reinsurance payables
12.0
12.0
-
-
-
12.0
16.2
16.2
-
-
-
16.2
Other payables
12.0
12.0
-
-
-
12.0
8.7
8.7
-
-
-
8.7
Lease liabilities
2.3
0.7
1.6
-
-
2.3
2.4
0.6
1.2
0.6
-
2.4
Total
618.5
182.7
233.0
117.3
85.5
618.5
418.4
135.4
161.2
66.7
55.1
418.4
Actual maturities of the above may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.
The estimation of the ultimate liability for incurred claims is complex and incorporates a significant amount of judgement. The timing of payments is also uncertain and cannot be predicted as simply
as for other financial liabilities. Actuarial and statistical techniques, past experience and management\u2019s judgement have been used to determine a likely settlement pattern.
As at 31 December 2023, cash and cash equivalents were $199.8 million (31 December 2022: $112.9 million). Conduit manages its liquidity risks via its investment strategy to hold high quality, liquid
securities, sufficient to meet its reinsurance liabilities and other near-term liquidity requirements. In addition, Conduit has established asset allocation and maturity parameters within the investment
guidelines such that the majority of the investments are in high quality assets which could be converted into cash promptly and at minimal expense. Conduit monitors market changes and outlook
and reallocates assets as it deems necessary.
As at 31 December 2023, Conduit considers it has more than adequate liquidity to pay its obligations as they fall due even if difficult investment market conditions were to prevail for a period of time.
As at 31 December 2023
Cash and cash
equivalents and fixed
maturity securities
$m
Ceded asset for
incurred claims
$m
AAA
434.2
-
AA+, AA, AA-
562.0
-
A+, A, A-
332.6
23.1
BBB+, BBB, BBB-
109.4
-
Other
-
19.5
Total
1,438.2
42.6
Cash and cash
equivalents and fixed
maturity securities
Ceded asset for
As at 31 December 2022
$m
incurred claims
AAA
651.4
-
AA+, AA, AA-
74.5
-
A+, A, A-
279.7
31.0
BBB+, BBB, BBB-
129.0
-
Other
-
27.5
Total
1,134.6
58.5
Total expected premium cash flows represents the premium, net of deductions, expected to be
received for past and future reinsurance coverage. The following table shows total expected
premium cash flows that are not yet due and those that are past due but not impaired, which
represents the exposure to credit risk on reinsurance contracts issued at the balance sheet date:
As at 31 December
2023
$m
2022
$m
(re-stated)
Not yet due
318.2
215.0
Less than 90 days past due
42.7
29.8
Over 90 days past due
7.0
3.4
Total
367.9
248.2
For the years ended 31 December 2023 and 2022 no provisions have been made for impaired
or irrecoverable balances and no amount was charged to the consolidated statement of
comprehensive income (loss) in respect of bad debts.
e.
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
personnel, systems or external events. During the reporting period, various operational risks were
identified, and steps were taken to manage or mitigate these risks.
The risk framework addresses the identification, assessment and management of operational
risks. This process involves the use of risk registers to identify inherent risk and residual risk after
the application of controls. The management of individual risks is the responsibility of
management, with independent challenge and oversight provided by the risk function. The results
of compliance reviews and independent internal audits provide an additional level of review and
verification. The Audit Committee has selected a reputable provider to serve as outsourced
internal auditors.
Strategic risk
Conduit has identified several strategic risks, including:
\u2014
The risks that either the poor execution of the business plan or an inappropriate business plan
in itself results in a strategy that fails to reflect adequately the trading environment, resulting
in an inability to optimise performance, including reputational risk;
\u2014
The risks of the failure to maintain adequate capital, accessing capital at an inflated cost or the
inability to access capital and unanticipated changes in vendor, regulatory and/or rating
agency models that could result in an increase in capital requirements or a change in the type
of capital required; and
\u2014
The risks of succession planning, staff retention and key personnel risks.
Business plan risk
Conduit's business plan forms the basis of operations and provides strategic direction to
management. Actual versus planned results are monitored regularly.
Capital management risk
The total tangible capital is as follows:
As at 31 December
2023
$m
2022
$m
(re-stated)
Shareholders' equity
987.4
867.2
Intangible assets
-
1.4
Total tangible capital
987.4
865.8
Risks associated with the effectiveness of Conduit\u2019s capital management are mitigated as follows:
\u2014
Regular monitoring of current and prospective regulatory and rating agency capital requirements;
\u2014
Oversight of capital requirements by the Board;
\u2014
Ability to purchase sufficient, cost-effective reinsurance;
\u2014
Maintaining contact with vendors, regulators and rating agencies in order to stay abreast
of upcoming developments; and
\u2014
Participation in industry groups such as the Association of Bermuda Insurers and Reinsurers,
Reinsurance Association of America and the International Underwriting Association.
Conduit reviews the level and composition of capital on an ongoing basis with a view of:
\u2014
Maintaining sufficient capital for underwriting opportunities and to meet obligations
to policyholders;
\u2014
Maximising the risk-adjusted return to shareholders within the context of the defined
risk appetite;
\u2014
Maintaining an adequate financial strength rating; and
\u2014
Meeting all relevant capital requirements.
Capital is increased or returned as appropriate. The retention of earnings generated leads to an
increase in capital. Capital raising can include debt or equity and returns of capital may be made
through dividends, share repurchases, a redemption of debt or any combination thereof. Other
capital management tools and products available to Conduit may also be utilised. All capital
actions require approval by the Board.
The primary source of capital used by Conduit is equity shareholders\u2019 funds. As a holding
company, CHL relies on dividends from its operating entity to provide the cash flow required
for dividends to shareholders. The ability of the operating entity to pay dividends and make
capital distributions is subject to the legal and regulatory restrictions of the jurisdiction in which it
operates.
CRL is regulated as a Class 4 (re)insurer by the BMA and is required to hold sufficient capital in
that under applicable regulations. BMA\u2019s regulatory framework, has been assessed as equivalent
to the EU\u2019s Solvency II regime. CRL had sufficient capital at all times throughout the year to meet
the BMA\u2019s requirements, inclusive of the BSCR standard formula and minimum margin of
solvency.
Retention risk
Risks associated with succession planning, staff retention and key man risks are mitigated
through a combination of resource planning processes and controls, including:
\u2014
The identification of key personnel with appropriate succession plans at CHL;
\u2014
The identification of key team profit generators at CRL and function heads with targeted
retention packages;
\u2014
Documented recruitment procedures, position descriptions and employment contracts;
\u2014
Resource monitoring and the provision of appropriate compensation, including equity-based
incentives which vests over a defined time horizon, subject to achieving certain performance
criteria; and
\u2014
Training schemes.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f54784": { "value": "Operating segmentsThe underwriting business is comprised of three principal divisions: Property, Casualty and Specialty. These divisions are also considered to be Conduit's operating segments. Details of each operatingsegment and reinsurance revenue by geographic region and operating segment are as follows:20232022PropertyCasualtySpecialtyTotalTotalPropertyCasualtySpecialtyTotalTotalYear ended 31 December$m$m$m$m%$m$m$m$m%US198.0118.320.6336.953.2109.8104.03.9217.755.5Worldwide101.223.474.7199.331.556.514.951.4122.831.3Europe21.728.219.769.611.015.716.27.038.99.9Other24.31.91.027.24.310.81.60.613.03.3Reinsurance revenue345.2171.8116.0633.0100.0192.8136.762.9392.4100.0Year ended 31 December 2023Property$mCasualty$mSpecialty$mTotal$mReinsurance revenue by geographic regionUS198.0118.320.6336.9Worldwide101.223.474.7199.3Europe21.728.219.769.6Other24.31.91.027.2Reinsurance revenue345.2171.8116.0633.0Year ended 31 December 2022Property$mCasualty$mSpecialty$mTotal$mReinsurance revenue by geographic regionUS109.8104.03.9217.7Worldwide56.514.951.4122.8Europe15.716.27.038.9Other10.81.60.613.0Reinsurance revenue192.8136.762.9392.4Management and the Board review Conduit\u2019s business and evaluates its performance primarilyby three segments: Property, Casualty and Specialty. These are considered to be the reportablesegments for the purposes of segmental reporting. Further classes of business are underwrittenwithin each reportable segment. The nature of these individual classes is discussed further in theRisk disclosures section in note 3.PropertyUS and international property catastrophe and non-catastrophe risks on anexcess of loss and proportional contract basis.CasualtyUS and international casualty risks principally including directors and officersliability, financial institutions liability, general liability, medical malpractice,professional liability and transactional liability.SpecialtyDiverse portfolio of business, including aviation, energy, engineering andconstruction, environmental, marine, renewables, political violence and terrorismand whole account.Reportable segment performance is measured by the reinsurance service and finance result andthe combined ratio. The chief operating decision maker does not manage Conduit's assets byreportable segment, and, accordingly, investment income and other non-underwriting relateditems are not allocated to each reportable segment. Refer to the risk disclosures for moreinformation. All amounts reported are transactions with external parties and associates.There are no significant inter-segmental transactions.Included within the worldwide geographic region, are premiums written with external partiesin Bermuda for $4.0 million (31 December 2022: $0.6 million).20232022PropertyCasualtySpecialtyTotalPropertyCasualtySpecialtyTotalYear ended 31 December$m$m$m$m$m$m$m$mReinsurance revenue345.2171.8116.0633.0192.8136.762.9392.4Ceded reinsurance expenses(66.9)(1.3)(8.5)(76.7)(40.5)(1.2)(6.9)(48.6)Net reinsurance revenue278.3170.5107.5556.3152.3135.556.0343.8Reinsurance losses and loss related amounts, discounted(136.5)(120.7)(70.8)(328.0)(142.9)(116.1)(73.5)(332.5)Reinsurance operating expenses(30.4)(11.9)(6.7)(49.0)(16.7)(8.5)(4.4)(29.6)Reinsurance service expenses(166.9)(132.6)(77.5)(377.0)(159.6)(124.6)(77.9)(362.1)Ceded reinsurance recoveries4.60.2(0.5)4.321.40.27.128.7Reinsurance service result116.038.129.5183.614.111.1(14.8)10.4Net reinsurance finance expense(9.5)(15.0)(8.3)(32.8)2.513.84.520.8Reinsurance service and finance result106.523.121.2150.816.624.9(10.3)31.2Other operating expenses(28.3)(20.7)Net unallocated revenue (expenses)68.3(54.4)Total comprehensive income190.8(43.9)Net loss ratio (discounted)47.4%70.7%66.3%58.2%79.8%85.5%118.6%88.4%Reinsurance operating expense ratio10.9%7.0%6.2%8.8%11.0%6.3%7.9%8.6%Other operating expense ratio5.1%6.0%Combined ratio (discounted)58.3%77.7%72.5%72.1%90.8%91.8%126.5%103.0%Net loss ratio (undiscounted)51.5%89.4%77.1%68.0%83.0%93.8%128.8%94.7%Combined ratio (undiscounted)62.4%96.4%83.3%81.9%94.0%100.1%136.7%109.3%", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f57253": { "value": "Market riskConduit is at risk of loss due to movements in market factors. The main market risks Conduit wasexposed to include:\u2014Reinsurance risk;\u2014Investment risk; and\u2014Currency risk.Reinsurance riskConduit is exposed to reinsurance market risk from several sources, including the following:\u2014The advent or continuation of a soft market, which may result in a stabilisation or declinein premium rates and/or terms and conditions for certain classes, or across all classes;\u2014The actions and reactions of key competitors, which may directly result in volatility inpremium volumes and rates, fee levels and other input costs;\u2014Market events, including unusual inflation in rates, may result in a limit in the availability ofcover, causing political intervention or national remedies;\u2014Failure to maintain broker and cedant relationships, leading to a limited or substandard choiceof risks inconsistent with Conduit\u2019s risk appetite;\u2014Changes in laws and regulation, including capital, governance or licensing requirements: and\u2014Changes in the geopolitical environment.The most important method to mitigate reinsurance market risk is to maintain strict underwritingstandards. Conduit manages reinsurance market risk in numerous ways, including the following:\u2014Reviews and amends underwriting plans and outlook as necessary;\u2014Reduces exposure to, or withdraws from, market sectors where conditions have reachedunattractive levels;\u2014Purchases appropriate, cost-effective reinsurance cover to mitigate exposures:\u2014Closely monitors changes in rates, terms and conditions and inflation;\u2014Ensures through rigorous underwriting criteria that surplus capital does not drive short-termrisk appetite;\u2014An underwriting roundtable meeting, typically held daily, where deal flow, pricing andopportunities are discussed;\u2014Holds quarterly management Underwriting Oversight Committee meetings that considermatters that include underwriting performance for CRL;\u2014Holds an annual strategy review meeting;\u2014Holds a quarterly Underwriting Committee board meeting that considers matters includingunderwriting performance for CRL;\u2014Holds a quarterly Risk, Capital and Compliance Committee meeting to review relevant risk andcapital considerations for CRL; and\u2014Holds regular meetings with regulators and rating agencies.Reinsurance finance riskEstimates of future cash flows for incurred claims are discounted on initial recognition and thenre-measured to current rates as at each reporting date. Reinsurance liabilities and ceded assetsfor incurred claims are therefore sensitive to the level of market interest rates. Interest rate riskon reinsurance contracts is the risk that the value of the future cash flows will fluctuate due tochanges in market interest rates. Movements in interest rates may lead to an adverse impact onthe value of Conduit\u2019s reinsurance contract assets and liabilities. Conduit manages this risk bymonitoring the duration of reinsurance contract cash flows and adopting policies regarding assetand liability matching to reduce the volatility arising from interest rate movements on assets andliabilities in the consolidated statement of comprehensive income (loss).The total reinsurance contract assets and liabilities exposed to interest rate risk are detailedbelow:20232022As at 31 DecemberNote$m$mCeded asset for incurred claims1442.658.5Liability for incurred claims14(592.2)(391.1)Total(549.6)(332.6)Discount ratesAll future cash flows are discounted using yield curves that are adjusted to reflect the characteristics of the cash flows and the liquidity of the reinsurance contracts. Conduit determines its discountrates using a bottom-up method of using a risk-free rate, plus an illiquidity premium where applicable. Risk-free rates are determined by reference to the yields published by EIOPA for the relevant,material currencies. The illiquidity premium is estimated by reference to observable market corporate bond yields.The annual spot rates, including illiquidity premium, used for the re-measurement of the net liability for incurred claims as at the balance sheet date are shown below for all portfolios:20232022As at 31 December1 year3 years5 years10 years1 year3 years5 years10 yearsUSD5.26%4.22%4.00%3.95%5.57%4.76%4.45%4.25%EUR3.86%2.94%2.82%2.89%3.68%3.70%3.63%3.59%GBP5.24%4.17%3.86%3.78%4.96%4.83%4.56%4.21%The sensitivity of Conduit's net reinsurance liability for incurred claims to interest rate movementsis detailed below, assuming linear movements in interest rates:20232022As at 31 December$m%$m%Immediate shift in yield (basis points)10017.43.210.73.27513.12.48.12.4508.71.65.41.6254.40.82.70.80-----25(4.4)(0.8)(2.7)(0.8)-50(8.8)(1.6)(5.5)(1.7)-75(13.3)(2.4)(8.2)(2.5)-100(17.8)(3.2)(11.0)(3.3)Investment riskMovements in investments resulting from changes in interest and inflation rates, credit spreads,and currency exchange rates, among other factors, may lead to an adverse impact on the valueof Conduit\u2019s investment portfolio. Conduit seeks to invest in issuers with stronger ESG practiceson balance, as it believes that this will also help reduce risk in the portfolio.The Investment Committee of the CRL Board is responsible for all investment-related decisionsand investment guidelines. The investment guidelines set the parameters within which Conduit\u2019sexternal managers must operate. Important parameters of these guidelines include permissibleasset classes, duration ranges, credit quality, permitted currency, maturity, industry sectors,geographical, sovereign and issuer exposures. Guideline compliance is monitored on a monthlybasis. The portfolio of fixed maturity securities is currently managed by four external managers.Their performance is monitored on an ongoing basis. Conduit projects the level of funds requiredto meet near-term obligations and cash flow needs following extreme events in order to ensureadequate liquidity is maintained. Conduit also prioritises liquid asset classes with higher creditquality and shorter duration so that Conduit can meet reinsurance and other near-termobligations. Conduit has split the portfolio into a short-tail mandate, to better match the propertyand specialty classes of business, and a long-tail mandate, to better match the casualty classes ofbusiness and some aspects of the specialty classes of business. The short-tail mandate will beslightly shorter duration than the long-tail mandate.Conduit reviews the composition, duration and asset allocation of its investment portfolio on aregular basis to respond to changes in interest rates and other market conditions. If certain assetclasses are anticipated to produce a higher return within management\u2019s risk tolerance, anadjustment in asset allocation may be made. Conversely, if the risk profile is expected to moveoutside of tolerance levels, adjustments may be made to reduce the risks in the portfolio.Conduit models various periods of significant stress in order to better understand the investmentportfolio\u2019s risks and exposures. The scenarios represent what could, and most likely will, occur \u2013albeit not in the exact form of the scenarios, which are based on historic periods of volatility.Conduit also monitors the portfolio impact of more severe scenarios consisting of extreme shocks.Conduit focuses on the most significant risks in its investment portfolio which are interest raterisk, credit risk and liquidity risk, and has built stress testing and risk analytics around these risksto ensure they are within tolerances and preferences.Strategic asset allocation reviews will be undertaken periodically to assess Conduit\u2019s overallinvestment strategy and to consider alternative asset allocations to achieve the best risk-adjustedreturn within Conduit's risk appetite. Any resulting recommendations would be approved by theappropriate management committee(s) and reported to the Board. The Investment Committeemeets quarterly to ensure that the strategic and tactical investment actions were consistent withinvestment risk preferences, appetite, risk and return objectives and tolerances. The investmentrisk tolerances have been incorporated into the risk framework.The investment mix by mandate and sector of Conduit's portfolio of fixed maturity securitiesis as follows:EstimatedEstimatedEstimatedEstimatedEstimatedEstimatedfair valuefair valuefair valuefair valuefair valuefair valueshort-taillong-tailtotalshort-taillong-tailtotalAs at 31 December 2023$m$m$mAs at 31 December 2022$m$m$mShort-term investments42.04.746.7Short-term investments33.24.737.9US treasuries230.0113.9343.9US treasuries103.6106.6210.2US agency debt2.01.83.8US agency debt-1.81.8US municipals11.87.319.1US municipals10.05.215.2Non-US government and agency2.0-2.0Non-US government and agency2.0-2.0Asset-backed125.448.9174.3Asset-backed102.661.2163.8US government agency mortgage-backed62.359.8122.1US government agency mortgage-backed52.747.9100.6Non-agency mortgage-backed11.76.618.3Non-agency mortgage-backed9.83.012.8Agency commercial mortgage-backed7.8-7.8Agency commercial mortgage-backed3.2-3.2Non-agency commercial mortgage-backed25.631.256.8Non-agency commercial mortgage-backed21.930.852.7Corporate286.1157.5443.6Corporate263.6157.9421.5Total806.7431.71,238.4Total602.6419.11,021.7Corporate and non-US government and agency bonds by country are as follows:Non-USOthergovernmentFinancialsindustriesand agencyTotalAs at 31 December 2023$m$m$m$mUS179.0178.5-357.5UK22.91.6-24.5Canada16.10.9-17.0Other countries42.91.72.046.6Total260.9182.72.0445.6Non-USOthergovernmentFinancialsindustriesand agencyTotalAs at 31 December 2022$m$m$m$mUS140.6187.7-328.3UK21.75.5-27.2Canada23.20.5-23.7Other countries35.46.92.044.3Total220.9200.62.0423.5The sector allocation of corporate bonds is as follows:20232022As at 31 December$m%$m%Financials260.958.8220.952.4Industrials161.436.4180.342.8Utilities21.34.820.34.8Total443.6100.0421.5100.0Conduit\u2019s investment portfolio is comprised of fixed maturity securities and cash and cashequivalents. Fair values can be impacted by movements in interest rates, credit ratings, exchangerates, the current economic environment and outlook. The estimated fair value of the portfolio offixed maturity securities is generally inversely correlated to movements in market interest rates.If market interest rates fall, the estimated fair value of Conduit\u2019s portfolio of fixed maturitysecurities would tend to rise and vice versa. The sensitivity of the price of fixed maturitysecurities to movements in interest rates is indicated by their duration. The greater a security\u2019sduration, the greater its price volatility to movements in interest rates. The sensitivity of Conduit\u2019sportfolio of fixed maturity securities to interest rate movements is detailed below, assuming linearmovements in interest rates.20232022As at 31 December$m%$m%Immediate shift in yield (basis points)100(32.1)(2.6)(23.0)(2.2)75(24.1)(1.9)(17.2)(1.7)50(16.0)(1.3)(11.5)(1.1)25(8.0)(0.6)(5.7)(0.6)0-----259.10.76.60.6-5018.31.513.21.3-7527.42.219.71.9-10036.52.926.32.6Conduit mitigates interest rate risk on the investment portfolio by establishing and monitoringduration ranges in its investment guidelines. The duration of the portfolio is matched to themodelled expected duration of the reinsurance reserves, within a permitted range. The permittedduration range for the portfolio is between 1.5 and 5 years. The overall duration for the fixedmaturity securities, managed cash and cash equivalents is 2.4 years as at 31 December 2023(as at 31 December 2022: 2.2 years).In addition to duration management, Conduit monitors VaR to measure potential losses in theestimated fair values of its cash and invested assets and to understand and monitor risk. The VaRcalculation is performed using variance/covariance risk modelling. Securities are valuedindividually using standard market pricing models. These security valuations serve as the inputto many risk analytics. The principal VaR measure that is produced is an annual VaR at the 99thpercentile confidence level. Under normal conditions, the portfolio is not expected to lose morethan the VaR metric listed below, 99% of the time over a one-year time horizon. Theappropriateness of this measure is considered by the Investment Committee periodically.Conduit\u2019s annual VaR calculation is as follows:Currency riskConduit is susceptible to fluctuations in rates of foreign exchange, principally between the US dollar and pound sterling and the US dollar and the euro. Even though risks are assumed on a worldwidebasis, they are predominantly denominated in US dollars. Conduit is exposed to currency risk to the extent its assets are denominated in different currencies to its liabilities. Conduit is also exposed totranslation risk on non-monetary assets and liabilities. Foreign currency gains and losses are recorded in the period they occur in the consolidated statement of comprehensive income (loss).Conduit hedges monetary non-US dollar liabilities primarily with non-US dollar assets but may also use derivatives, such as currency forwards, to mitigate foreign currency exposures. The mainforeign currency exposure relates to its reinsurance and ceded reinsurance assets and liabilities, cash holdings and dividend payable, if applicable.With the adoption of IFRS 17 all reinsurance and ceded reinsurance assets and liabilities are monetary items and are revalued at period end exchange rates.The following table summarises the carrying value of all monetary and non-monetary assets and liabilities categorised by Conduit\u2019s main currencies. Prior periods have been restated for the adoptionof IFRS 17:As at 31 December 2023USD$mGBP$mEUR$mOther$mTotal$mTotal assets1,427.926.316.525.51,496.2Total liabilities(438.7)(20.4)(29.3)(20.4)(508.8)Net assets (liabilities)989.25.9(12.8)5.1987.4As at 31 December 2022 (re-stated)USD$mGBP$mEUROtherTotal$m$m$mTotal assets1,192.910.54.27.01,214.6Total liabilities(303.3)(8.9)(22.4)(12.8)(347.4)Net assets (liabilities)889.61.6(18.2)(5.8)867.2The impact on profit from a proportional foreign exchange movement of 10.0% against the US dollar at year end spot rates would be an increase or decrease of $0.4 million (31 December 2022:decrease or increase $1.3 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f60847": { "value": "c.Liquidity riskLiquidity risk is the risk that cash may not be available to pay obligations when they are duewithout incurring unreasonable costs. Conduit's main exposure to liquidity risk is with respect toits reinsurance and investment activities. Conduit is exposed if proceeds from the sale of financialassets are not sufficient to fund obligations arising from reinsurance contacts and/or otherliabilities. Conduit can be exposed to fund daily calls on its available investment assets, principallyto settle reinsurance claims and/or to fund trust accounts following a large catastrophe loss, orother collateral requirements.Liquidity risk exposures related to reinsurance activities are as follows:\u2014Large catastrophic events, or multiple medium-sized events in quick succession, requiring thepayment of high value claims within a short time frame or to fund trust accounts establishedto collateralise claims payment liabilities;\u2014Failure of cedants to meet their contractual obligations with respect to the timely paymentof premiums; and\u2014Failure of Conduit\u2019s ceded reinsurers to meet their contractual obligations to pay claimswithin a timely manner.Liquidity risk exposures related to investment activities are as follows:\u2014Adverse market movements and/or a duration mismatch to obligations, resultingin investments needing to be disposed of at a significant realised loss; and\u2014An inability to liquidate investments due to market conditions.Conduit's investment strategy is to hold high quality, liquid securities sufficient to meetreinsurance liabilities and other near-term liquidity requirements. Portfolios are specificallydesigned to ensure funds are readily available in an extreme event.The maturity dates of Conduit's portfolio of fixed maturity securities are as follows:As at 31 December 2023Short-tail$mLong-tail$mTotal$mFixed maturity securities at FVTPLLess than one year174.629.9204.5Between one and two years135.313.1148.4Between two and three years122.347.7170.0Between three and four years29.321.550.8Between four and five years41.179.8120.9Over five years71.393.2164.5Asset-backed and mortgage-backed232.8146.5379.3Total806.7431.71,238.4As at 31 December 2022Short-tail$mLong-tail$mTotal$mFixed maturity securities at FVTPLLess than one year167.946.0213.9Between one and two years149.537.0186.5Between two and three years54.212.566.7Between three and four years15.848.864.6Between four and five years4.921.025.9Over five years20.1110.9131.0Asset-backed and mortgage-backed190.2142.9333.1Total602.6419.11,021.7The estimated maturity profile of the reinsurance liability for incurred claims and financial liabilities of Conduit is as follows:Years until liability becomes due \u2013 discounted20232022CarryingLess thanOne toThree toCarryingLess thanOne toThree tovalueonethreefiveOver fiveTotalvalueonethreefiveOver fiveTotalAs at 31 December$m$m$m$m$m$m$m$m$m$m$m$mReinsurance liability for incurred claims592.2158.0231.4117.385.5592.2391.1109.9160.066.155.1391.1Other reinsurance payables12.012.0---12.016.216.2---16.2Other payables12.012.0---12.08.78.7---8.7Lease liabilities2.30.71.6--2.32.40.61.20.6-2.4Total618.5182.7233.0117.385.5618.5418.4135.4161.266.755.1418.4Actual maturities of the above may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.The estimation of the ultimate liability for incurred claims is complex and incorporates a significant amount of judgement. The timing of payments is also uncertain and cannot be predicted as simplyas for other financial liabilities. Actuarial and statistical techniques, past experience and management\u2019s judgement have been used to determine a likely settlement pattern.As at 31 December 2023, cash and cash equivalents were $199.8 million (31 December 2022: $112.9 million). Conduit manages its liquidity risks via its investment strategy to hold high quality, liquidsecurities, sufficient to meet its reinsurance liabilities and other near-term liquidity requirements. In addition, Conduit has established asset allocation and maturity parameters within the investmentguidelines such that the majority of the investments are in high quality assets which could be converted into cash promptly and at minimal expense. Conduit monitors market changes and outlookand reallocates assets as it deems necessary.As at 31 December 2023, Conduit considers it has more than adequate liquidity to pay its obligations as they fall due even if difficult investment market conditions were to prevail for a period of time.", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f62342": { "value": "
As at 31 December 2023
Cash and cash
equivalents and fixed
maturity securities
$m
Ceded asset for
incurred claims
$m
AAA
434.2
-
AA+, AA, AA-
562.0
-
A+, A, A-
332.6
23.1
BBB+, BBB, BBB-
109.4
-
Other
-
19.5
Total
1,438.2
42.6
Cash and cash
equivalents and fixed
maturity securities
Ceded asset for
As at 31 December 2022
$m
incurred claims
AAA
651.4
-
AA+, AA, AA-
74.5
-
A+, A, A-
279.7
31.0
BBB+, BBB, BBB-
129.0
-
Other
-
27.5
Total
1,134.6
58.5
Total expected premium cash flows represents the premium, net of deductions, expected to be
received for past and future reinsurance coverage. The following table shows total expected
premium cash flows that are not yet due and those that are past due but not impaired, which
represents the exposure to credit risk on reinsurance contracts issued at the balance sheet date:
As at 31 December
2023
$m
2022
$m
(re-stated)
Not yet due
318.2
215.0
Less than 90 days past due
42.7
29.8
Over 90 days past due
7.0
3.4
Total
367.9
248.2
For the years ended 31 December 2023 and 2022 no provisions have been made for impaired
or irrecoverable balances and no amount was charged to the consolidated statement of
comprehensive income (loss) in respect of bad debts.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65330": { "value": "Investment returnNetNetNetrealisedunrealisedTotalinvestmentgainsgainsinvestmentincome(losses)(losses)returnAs at 31 December 2023$m$m$m$mFixed maturity securities35.7(1.3)30.665.0Cash and cash equivalents5.6--5.6Total41.3(1.3)30.670.6NetNetNetrealisedunrealisedTotalinvestmentgainsgainsinvestmentincome(losses)(losses)returnAs at 31 December 2022$m$m$m$mFixed maturity securities16.5(2.8)(67.8)(54.1)Cash and cash equivalents1.3--1.3Total17.8(2.8)(67.8)(52.8)Included in net investment income is $1.3 million of investment management and custody fees for the year ended31 December 2023 (31 December 2022: $1.1 million). Net foreign exchange gains (losses) on cash and cashequivalents and fixed maturity securities for the year ended 31 December 2023 was nil (31 December 2022: $0.1million loss). Foreign exchange impacts are not included in the investment returns in the table above.12. InvestmentsCost oramortisedUnrealisedUnrealisedEstimatedCost oramortisedUnrealisedUnrealisedEstimatedcostgainslossesfair valuecostgainslossesfair valueAs at 31 December 2023$m$m$m$mAs at 31 December 2022$m$m$m$mFixed maturity securities, at FVTPLFixed maturity securities, at FVTPLShort-term investments46.7--46.7Short-term investments37.9--37.9US treasuries351.02.1(9.2)343.9US treasuries221.60.2(11.6)210.2US agency debt4.0-(0.2)3.8US agency debt2.0-(0.2)1.8US municipals19.50.3(0.7)19.1US municipals16.4-(1.2)15.2Non-US government and agency2.0--2.0Non-US government and agency2.1-(0.1)2.0Asset-backed177.30.3(3.3)174.3Asset-backed171.6-(7.8)163.8US government agency mortgage-backed135.90.7(14.5)122.1US government agency mortgage-backed116.30.1(15.8)100.6Non-agency mortgage-backed20.00.1(1.8)18.3Non-agency mortgage-backed15.1-(2.3)12.8Agency commercial mortgage-backed8.10.1(0.4)7.8Agency commercial mortgage-backed3.7-(0.5)3.2Non-agency commercial mortgage-62.70.2(6.1)56.8Non-agency commercial mortgage-59.7-(7.0)52.7 backedbackedCorporate456.02.5(14.9)443.6Corporate450.70.1(29.3)421.5Total1,283.26.3(51.1)1,238.4Total1,097.10.4(75.8)1,021.7As at 31 December 2023 other assets and other payabl es incl uded $0.1 million and nil for investments soldand purchased, respectively (31 December 2022: $1.2 million and $1.2 million, respectively).Conduit determines the estimated fair value of each individual security utilising the highest-level inputsavailable. Prices for the investment portfolio are provided via a third-party investment accounting firm whosepricing processes and the controls thereon are subject to an annual audit on both the operation and theeffectiveness of those controls. Various recognised reputablepricing sources are used including pricing vendors. The pricing sources use bid prices whereavailable, otherwise indicative prices are quoted based on observable market trade data. Theprices provided are compared to the investment managers\u2019 pricing.Conduit has not made any adjustments to any pricing provided by independent pricing servicesor its third-party investment managers for the years ended 31 December 2023 and 2022. The fairvalue of securities in the investment portfolio is estimated using the following techniques:LEVEL (I) \u2013 Level (I) investments are securities with quoted prices in active markets. A financialinstrument is regarded as quoted in an active market if quoted prices are readily and regularlyavailable from an exchange, dealer, broker, industry group, pricing service or regulatory agencyand those prices represent actual and regularly occurring market transactions on an arm\u2019slength basis.LEVEL (II) \u2013 Level (II) investments are securities with quoted prices in active markets for similarassets or liabilities or securities valued using other valuation techniques for which all significantinputs are based on observable market data. Instruments included in Level (II) are valued viaindependent external sources using directly observable inputs to models or other valuationmethods. The valuation methods used are typically industry accepted standards and includebroker-dealer quotes and pricing models including present values and future cash flows withinputs such as yield curves, credit spreads, interest rates, prepayment speeds and default rates.LEVEL (III) \u2013 Level (III) investments are securities for which valuation techniques are not basedon observable market data and require significant management judgement.Conduit determines whether transfers have occurred between levels of the fair value hierarchy byre-assessing the categorisation at the end of each reporting period. Transfers from Level (I) to (II)securities amounted to $9.4 million and transfers from Level (II) to (I) securities amounted to$63.4 million during the year ended 31 December 2023 using end of current period positions andestimated fair values. Transfers from Level (I) to (II) securities amounted to $76.2 million andtransfers from Level (II) to (I) securities amounted to $37.8 million during the year ended 31December 2022 using end of current period positions and estimated fair values. There wereno investments included in Level (III) for either year end.The fair value hierarchy of Conduit's investment portfolio is as follows:As at 31 December 2023Level I$mLevel II$mTotal$mFixed maturity securities, at FVTPLShort-term investments46.10.646.7US treasuries343.9-343.9US agency debt-3.83.8US municipals-19.119.1Non-US government and agency-2.02.0Asset-backed-174.3174.3US government agency mortgage-backed-122.1122.1Non-agency mortgage-backed-18.318.3Agency commercial mortgage-backed-7.87.8Non-agency commercial mortgage-backed-56.856.8Corporate93.6350.0443.6Total483.6754.81,238.4Level ILevel IITotalAs at 31 December 2022$m$m$mFixed maturity securities, at FVTPLShort-term investments37.9-37.9US treasuries210.2-210.2US agency debt-1.81.8US municipals-15.215.2Non-US government and agency-2.02.0Asset-backed-163.8163.8US government agency mortgage-backed-100.6100.6Non-agency mortgage-backed-12.812.8Agency commercial mortgage-backed-3.23.2Non-agency commercial mortgage-backed-52.752.7Corporate51.3370.2421.5Total299.4722.31,021.7Refer to note 16 for investments provided as collateral under Conduit\u2019s financing arrangements.", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65622": { "value": "Reinsurance finance return20232022Year ended 31 December$m$mInterest accretion from reinsurance contracts(28.9)(7.3)Interest accretion from ceded reinsurance contracts held2.91.2Net interest accretion(26.0)(6.1)Change in discount rates from reinsurance contracts(7.2)29.3Change in discount rates from ceded reinsurance contracts held0.4(2.4)Net change in discount rates(6.8)26.9Net reinsurance finance income (expense)(32.8)20.814.Reinsurance contractsThe breakdown of portfolios of reinsurance contracts issued and reinsurance contracts held, thatare in an asset position and those in a liability position and by type of reinsurance asset orliability, is set out below.The reconciliation from the opening to the closing balances of the liability for remaining coverageand the liability for incurred claims for reinsurance contracts issued and ceded reinsurancecontracts held is shown below. The reconciliation shows the movement in the liability by thereinsurance service result, total comprehensive income (loss) and cash flows separately forreinsurance contracts issued and ceded reinsurance contracts held.31 December1 January31 December202220222023$m$mAs at$m(re-stated)(re-stated)Reinsurance contract liabilities(494.5)(336.3)(116.1)Liability for remaining coverage109.771.049.1Liability for incurred claims(592.2)(391.1)(162.8)Other reinsurance receivables (payables)(12.0)(16.2)(2.4)Reinsurance net asset (liability)(494.5)(336.3)(116.1)Ceded reinsurance contract assets42.767.341.0Ceded asset (liability) for remaining coverage(1.2)(3.7)(2.5)Ceded asset for incurred claims42.658.543.5Ceded other receivables (payables)1.312.5-Ceded reinsurance net asset (liability)42.767.341.0Remaining20232022RemainingcoverageIncurred claimscoverageIncurred claimsYear ended 31 December ($m)Excluding losscomponentPresent valueof future cashflowsRiskadjustmentTotalExcluding losscomponentPresent valueof future cashflowsRiskadjustmentTotalOpening reinsurance asset (liability)71.0(365.8)(25.3)(320.1)49.1(154.4)(8.4)(113.7)Reinsurance revenue633.0--633.0392.4--392.4Reinsurance service expensesIncurred claims and other expenses-(311.9)(27.1)(339.0)-(324.4)(21.0)(345.4)Amortisation of reinsurance acquisition expense cash flows(37.6)--(37.6)(22.9)--(22.9)Changes to liabilities for incurred claims for past service-(5.9)5.5(0.4)-4.22.06.2Reinsurance service expenses(37.6)(317.8)(21.6)(377.0)(22.9)(320.2)(19.0)(362.1)Reinsurance service result595.4(317.8)(21.6)256.0369.5(320.2)(19.0)30.3Reinsurance finance income (expense)-(33.2)(2.9)(36.1)-19.92.122.0Effect of exchange rates0.1(1.3)(0.1)(1.3)0.31.0-1.3Total changes in comprehensive income (loss)595.5(352.3)(24.6)218.6369.8(299.3)(16.9)53.6Investment components20.1(20.1)--13.7(13.7)--Cash flowsPremiums received(595.5)--(595.5)(376.5)--(376.5)Claims and other attributable expenses paid-195.9-195.9-101.6-101.6Reinsurance acquisition expense cash flows18.6--18.614.9--14.9Total cash flows(576.9)195.9-(381.0)(361.6)101.6-(260.0)Closing reinsurance asset (liability)109.7(542.3)(49.9)(482.5)71.0(365.8)(25.3)(320.1)Remaining20232022RemainingcoverageIncurred claimscoverageIncurred claimsYear ended 31 December ($m)Excluding losscomponentrecoveryPresent valueof future cashflowsRiskadjustmentTotalExcluding losscomponentrecoveryPresent value offuture cashflowsRisk adjustmentTotalOpening ceded reinsurance asset (liability)(3.7)58.5-54.8(2.5)43.5-41.0Ceded reinsurance expensesCeded reinsurance recoveriesAmounts recoverable on incurred claims(76.7)-----(76.7)-(48.6)--28.0--(48.6)28.0Changes to amounts recoverable for incurred claims-4.3-4.3-0.7-0.7Ceded reinsurance recoveries-4.3-4.3-28.7-28.7Reinsurance service result(76.7)4.3-(72.4)(48.6)28.7-(19.9)Ceded reinsurance finance income (expense)-3.3-3.3-(1.2)-(1.2)Effect of exchange rates--------Total changes in comprehensive income (loss)(76.7)7.6-(69.1)(48.6)27.5-(21.1)Investment components--------Cash flowsPremiums paid79.2--79.247.4--47.4Recoveries received-(23.5)-(23.5)-(12.5)-(12.5)Total cash flows79.2(23.5)-55.747.4(12.5)-34.9Closing ceded reinsurance asset (liability)(1.2)42.6-41.4(3.7)58.5-54.8Remaining20232022RemainingcoverageIncurred claimsPresent valuecoverageIncurred claimsPresent value ofYear ended 31 December ($m)Excluding losscomponentof future cashflowsRiskadjustmentTotalExcluding losscomponentfuture cashflows Risk adjustmentTotalOpening net reinsurance asset (liability)67.3(307.3)(25.3)(265.3)46.6(110.9)(8.4)(72.7)Net reinsurance revenueNet reinsurance service expensesNet incurred claims and other expenses556.3--(311.9)-(27.1)556.3-(339.0)343.8--(296.4)-(21.0)343.8-(317.4)Amortisation of reinsurance acquisition expense cash flows(37.6)--(37.6)(22.9)--(22.9)Changes to net liabilities for incurred claims for past service-(1.6)5.53.9-4.92.06.9Net reinsurance service expenses(37.6)(313.5)(21.6)(372.7)(22.9)(291.5)(19.0)(333.4)Reinsurance service result518.7(313.5)(21.6)183.6320.9(291.5)(19.0)10.4Net reinsurance finance income (expense)-(29.9)(2.9)(32.8)-18.72.120.8Effect of exchange rates0.1(1.3)(0.1)(1.3)0.31.0-1.3Total changes in comprehensive income (loss)518.8(344.7)(24.6)149.5321.2(271.8)(16.9)32.5Investment components20.1(20.1)--13.7(13.7)--Cash flowsNet premiums received(516.3)--(516.3)(329.1)--(329.1)Net claims and other attributable expenses paid-172.4-172.4-89.1-89.1Reinsurance acquisition expense cash flows18.6--18.614.9--14.9Total cash flows(497.7)172.4-(325.3)(314.2)89.1-(225.1)Closing net reinsurance asset (liability)108.5(499.7)(49.9)(441.1)67.3(307.3)(25.3)(265.3)Conduit did not book any additional case reserves for the years ended 31 December 2023 and2022. The net liability for incurred claims as at 31 December 2023 had an estimated duration of3.1 years (31 December 2022: 3.1 years).The liability established by Conduit is viewed as adequate, however a 20% increase in estimatedundiscounted losses would have a $133.9 million adverse impact on comprehensive income (loss)(31 December 2022: $91.9 million).Despite an active period for natural catastrophe losses for the industry, there were no majorevent losses individually or in aggregate which had a material impact on Conduit during 2023.During 2022 the most significant loss events impacting Conduit were the Ukraine war andHurricane Ian. The estimated undiscounted ultimate net impact, after ceded reinsurance andreinstatement premiums, is $24.6 million and $39.7 million respectively. Our undiscountedultimate loss estimates, net of ceded reinsurance and reinstatement premiums, for previouslyreported loss events remain stable. During the year ended 31 December 2023 the changes in thediscounted net liability for incurred claims for prior accident years was a reduction of $3.9 million(31 December 2022: $6.9 million).Claims development tableThe following tables show the estimates of cumulative undiscounted incurred claims, including the risk adjustment, for each successive accident year at each reporting date, together with thecumulative payments to date:Gross undiscounted claims, including risk adjustment$m$m$m$mAccident year202120222023TotalAt end of accident year190.7391.2401.3One year later184.7387.2Two years later187.5Current estimate of undiscounted incurred claims187.5387.2401.3976.0Cumulative payments to date(112.8)(135.7)(58.0)(306.5)Current estimate of undiscounted liability for incurred claims74.7251.5343.3669.5Effect of discounting(74.3)Current estimate of discounted liability for incurred claims595.2Ceded undiscounted recoveries, including risk adjustment$m$m$m$mAccident year202120222023TotalAt end of accident year(48.9)(39.0)-One year later(50.1)(36.9)Two years later(57.3)Current estimate of ceded undiscounted incurred recoveries(57.3)(36.9)-(94.2)Cumulative recoveries received to date38.0--38.0Current estimate of ceded undiscounted asset for incurred claims(19.3)(36.9)-(56.2)Effect of discounting4.7Current estimate of ceded asset for incurred claims(51.5)Net undiscounted claims, including risk adjustment$m$m$m$mAccident year202120222023TotalAt end of accident year141.8352.2401.3One year later134.6350.3Two years later130.2Current estimate of net undiscounted incurred claims130.2350.3401.3881.8Cumulative payments to date(74.8)(135.7)(58.0)(268.5)Current estimate of net undiscounted liability for incurred claims55.4214.6343.3613.3Effect of discounting(69.6)Current estimate of net liability for incurred claims543.7A reconciliation of the net liability for incurred claims per the claims development tables to the carrying amounts included in the balance sheet has been provided below. Loss related amountsrepresent amounts due that are contingent on claims, such as reinstatement premiums and profit commissions.Reconciliation to carrying amounts:20232022GrossCededNetGrossCededNetAs at 31 December$m$m$m$m$m$mUndiscounted liability for incurred claims per claims development tables669.5(56.2)613.3459.3(76.6)382.7Discount(74.3)4.7(69.6)(54.9)7.4(47.5)Liability for incurred claims per claims development tables595.2(51.5)543.7404.4(69.2)335.2Other loss related amounts(3.0)8.95.9(13.3)10.7(2.6)Liability (asset) for incurred claims592.2(42.6)549.6391.1(58.5)332.6The estimation of the ultimate fulfilment cash flows for claims is a complex process which incorporates a significant amount of judgement. It is reasonably possible that uncertainties inherent in thereserving process, delays in insureds or ceding companies reporting losses to Conduit, together with the potential for unforeseen adverse developments, could lead to a material change in estimatedliability for incurred claims. Further information on the calculation of the liability for incurred claims and associated risks are provided in the risk disclosures in note 3", "dimensions": { "concept": "ifrs-full:DisclosureOfReinsuranceExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65767": { "value": "7.Employee benefits and other incentivesAggregate remuneration and other incentives of Conduit\u2019s employees is as follows:20232022Year ended 31 December$m$mWages and salaries13.011.4Pension benefit1.31.1Bonus and other benefits15.07.7Total cash compensation29.320.2Equity-based incentives2.52.1Total employee benefits and other incentives31.822.3Equity-based incentives \u2013 MIPPrior to the IPO, a MIP was created. The purpose of the MIP was to provide an incentivescheme for the founders and initial employees for their services in establishing thefoundations of Conduit. The incentive is based around shares in CML, which will beautomatically exchanged for ordinary shares of CHL for an aggregate value equivalent to up to15% of the excess of the market value of CHL over and above the Invested Equity, subject tothe satisfaction of the vesting conditions. All outstanding and future grants have an exerciseperiod of four to seven years from the grant date. The fair value is estimated using astochastic Monte Carlo model.CML issued 100,000 A1 shares and 100,000 A2 shares during the period ended 31 December 2020at a subscription price of \u00a31.72 and $2.26, respectively. Refer to note 17 for additional details.The following table lists the assumptions used in the stochastic model for the MIP awards:AssumptionsDividend yield0%Expected volatility1range from17.2% \u2013 19.0%Risk-free interest rate2range from0.3% \u2013 0.6%Expected life of instrumentsrange from4 to 7 years1.The expected volatility was calculated based on a comparator group of companies.2.The risk-free interest rate is based on the yield of a US government bond on the date of grant.The shares were granted prior to the IPO and therefore discounts for business viability andlack of marketability were also applied. There are significant risks associated with an IPO andthe instruments are also illiquid until the tranche vesting dates. Management therefore selectedtheir best estimates at the time for these discounts. These assumptions were highlyjudgemental and input from advisers was sought. Management also considered alternativeassumptions and concluded there was not a material impact on the estimated valuationselected. The calculation of the equity-based incentive expense assumes no forfeitures dueto employee turnover, with subsequent adjustments to reflect actual experience. Theassumptions and estimated valuation selected resulted in 20% being expensed upfront forcertain employees as this portion was not tied to service conditions and was fully expensed inthe period ended 31 December 2020.Conditions of the MIP include:\u2014The incentives are to be equity-settled and have therefore been accounted for inaccordance with IFRS 2;\u2014The value of the services received in exchange for the share-based incentives is measuredby reference to the estimated fair value of the incentives at their grant date, with theestimated fair value recognised in the consolidated statement of comprehensive income(loss), together with a corresponding increase in other reserves within shareholders\u2019 equity,on a straight-line basis over the vesting period, based on an estimate of the number ofshares that will ultimately vest;\u2014Vesting conditions, other than market conditions linked to the share price of CHL, are nottaken into account when estimating the fair value; and\u2014At the end of each reporting period Conduit revises its estimates of the number of shares thatare expected to vest due to non-market conditions and recognises the impact of the revision tooriginal estimates, if any, in the consolidated statement of comprehensive income (loss), witha corresponding adjustment to shareholders\u2019 equity.Equity-based incentives \u2013 DSBPA percentage of each employee's bonus is automatically deferred into shares as nil cost options.The nil cost options vest annually in separate equal tranches over a three year period from thedate of grant and do not have associated performance criteria attached to the awards. Theseawards accrue dividend equivalents for all dividends declared where the record date fallsbetween the grant date and date of exercise, and are paid at the time of exercise.Number ofDSBPawardsOutstanding as at 31 December 2021-Granted764,575Exercised-Forfeited(11,559)Outstanding as at 31 December 2022753,016Granted315,875Exercised(250,963)Forfeited(35,236)Outstanding as at 31 December 2023782,692Equity-based incentives \u2013 LTIPThe LTIP is a retention scheme with awards granted to staff members as nil cost options. The nilcost options vest over a three year period from the date of grant and do not have associatedperformance criteria attached to the awards. These awards accrue dividend equivalents for allNumber ofLTIPawardsOutstanding as at 31 December 2022-Granted365,984Exercised-Forfeited-Outstanding as at 31 December 2023365,9848. Other operating expensesYear ended 31 December2023$m2022$mOther operating expenses include:Audit fees1.30.9Other auditor services0.10.1Total1.41.0dividends declared where the recoDuring the year ended 31 December 2023, KPMG Audit Limited provided non-audit services in relation toConduit's 2023 interim review and carbon emission disclosures. Fees for non-audit services in the yearended 31 December 2023 totalled $0.1 million (31 December 2022: $0.1 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f67222": { "value": "9. Financing costs20232022Year ended 31 December$m$mLOC and trust fees1.10.7Interest expense on lease liabilities0.10.1Total1.2Refer to note 16 for details of Conduit\u2019s financing arrangements.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f67313": { "value": "10. TaxBermudaCHL, CSL, CML and CRL have received an undertaking from the Bermuda government whichexempts them from all Bermuda local income, withholding and capital gains taxes until 31 March2035. On 27 December 2023 the Bermuda government enacted legislation, the BermudaCorporate Income Tax Act of 2023, into law which may supersede such exemptions. CHL, CSL,CML and CRL are currently not in scope for this new legislation and as such, the exemptionsprovided by the Bermuda government undertaking still apply.United KingdomCRSL is subject to normal UK corporation tax on all of its taxable profits. For the years ended 31December 2023 and 2022 an immaterial tax profit arose and Conduit has therefore not recogniseda deferred tax asset.", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f67351": { "value": "11. Cash and cash equivalents20232022As at 31 December$m$mCash at bank and in hand39.421.5Cash equivalents160.491.4Total199.8112.9Cash equivalents include money market funds and other short-term highly liquid investmentswith three months or less remaining until maturity at the time of purchase. The carrying amountof these assets approximates their fair value. Refer to note 16 for cash and cash equivalentsprovided as collateral under Conduit\u2019s financing arrangements.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f68930": { "value": "Interests in structured entitiesUnconsolidated structured entities in which Conduit has an interestAs part of Conduit\u2019s investment activities, it invests in unconsolidated structured entities. Conduitdoes not sponsor any of the unconsolidated structured entities. The business relations of Conduitwith the structured entities set out below do not give rise to consolidation because the criteriafor control pursuant to IFRS 10, as contained in our consolidation principles, are not met.A summary of interests in unconsolidated structured entities is as follows:20232022As at 31 December$m$mFixed maturity securities, at FVTPLAsset-backed174.3163.8US government agency mortgage-backed122.1100.6Non-agency mortgage-backed18.312.8Agency commercial mortgage-backed7.83.2Non-agency commercial mortgage-backed56.852.7Total379.3333.1The fixed maturity structured entities are used to meet specific investment needs of borrowersand investors which cannot be met from standardised financial instruments available in thecapital markets, providing liquidity and diversification. While individual securities may differinstructure, the principles of the instruments are similar and it is appropriate to aggregate theinvestments into the categories detailed above.The risk that Conduit faces in respect of the investments in structured entities is similar to the riskit faces in respect of other financial investments held on the consolidated balance sheet. Fairvalue is determined by market supply and demand, which is driven by investor evaluation of thecredit risk of the structure and changes in the term structure of interest rates which can changethe expectation of cash flows associated with the instrument and, therefore, its value in themarket.The maximum exposure to loss in respect of these structured entities would be the carryingvalue of the instruments that Conduit holds. Generally, default rates would have to increasesubstantially before Conduit would suffer a loss. This assessment is made prior to investing andregularly through the holding period for the security.Refer to note 16 for investments provided as collateral under Conduit\u2019s financing arrangements.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f73843": { "value": "Amounts recognised in the consolidated financial statementsYear ended 31 December2023$m2022$mConsolidated statement of comprehensive income (loss)Interest expense on lease liabilities0.10.1Depreciation of right-of-use assets0.60.7Total0.70.8Consolidated statement of cash flowsLease payments0.70.6Right-of-use lease assetsRight-of-use lease assets primarily relate to leased properties for Conduit's offices in Bermudaand office equipment.Right-of-use assets$mBalance and net book value as at 31 December 20212.9Depreciation(0.7)Balance and net book value as at 31 December 20222.2Additions0.5Depreciation(0.6)Balance and net book value as at 31 December 20232.1Lease liabilitiesAs at 31 December2023$m2022$mLess than one year0.80.6Between one and five years1.62.0Total undiscounted lease liabilities2.42.6The discounted lease liability as at 31 December 2023 was $2.3 million (31 December 2022:$2.4 million). Conduit does not face significant liquidity risk with respect to its lease liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74861": { "value": "17. Share capitalAuthorised share capitalNumber$mAuthorised common shares of $0.01 each10,000,000,000100.0Authorised A1 shares of \u00a30.01 each100,000-Authorised A2 shares of $0.01 each100,000-As at 31 December 2023 and 202210,000,200,000100.0CommonsharesA1 sharesA2 sharesTotalTotalAllotted, called-up and fully paidnumbernumbernumbernumber$mIssued165,239,997100,000100,000165,439,9971.7As at 31 December 2023 and 2022165,239,997100,000100,000165,439,9971.7The number of common shares in issue less own shares held as at 31 December 2023 was 158,056,137 (31 December 2022: 160,141,174).CHL holds 18,000 A1 and A2 shares at 31 December 2023 and 2022. The A1 and A2 shares issued by CML have no voting rights attached. Subject to vesting conditions, discussed in note 7, the A1 andA2 shares will be automatically exchanged for ordinary shares of CHL.", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f75320": { "value": "Own sharesOwn sharesNumber heldin treasury$mNumber heldin trust$mTotal numberof own sharesTotal$mAs at 31 December 2021(32,823)(0.2)--(32,823)(0.2)Repurchased(725,000)(3.4)--(725,000)(3.4)Purchased by EBT--(4,341,000)(16.5)(4,341,000)(16.5)As at 31 December 2022(757,823)(3.6)(4,341,000)(16.5)(5,098,823)(20.1)Purchased by EBT--(2,336,000)(13.7)(2,336,000)(13.7)Transferred to EBT757,8233.6(757,823)(3.6)--Distributed by EBT--250,9630.9250,9630.9As at 31 December 2023--(7,183,860)(32.9)(7,183,860)(32.9)Shares repurchased by CHL and the EBT will be held as own shares to meet future obligations under CHL\u2019s variable incentive schemes. See note 21 for information on shares held by the EBT.", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f75685": { "value": "DividendsRecord datePayment datePer share $$mFinal 202125 March 202222 April 20220.1829.7Interim 202219 August 20229 September 20220.1829.6Final 202224 March 202321 April 20230.1829.6Interim 202318 August 20238 September 20230.1829.7See note 23 for information with respect to dividends declared subsequent to 31 December 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f75976": { "value": "18. Other reservesOther reserves consist of the following:OtherShareTotal otherreservespremiumreserves$m$m$mAs at 31 December 20210.61,055.41,056.0Equity-based incentive expense2.1-2.1Transfer from share premium to contributed surplus1,055.4(1,055.4)-As at 31 December 20221,058.1-1,058.1Equity-based incentive expense2.5-2.5Distributions by EBT(1.0)-(1.0)As at 31 December 20231,059.6-1,059.6Other reserves include Conduit\u2019s equity-based incentive expense.Share premium includes any premiums received on issue of share capital. The transaction costs that wereattributable to the issuance of new shares incurred in forming Conduit were treated as a deduction fromshare premium. The share premium was transferred to contributed surplus during May 2022 afterapproval by Conduit's shareholders at the AGM.", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76138": { "value": "19. Contingencies and commitmentsLegal proceedings and regulationsConduit operates in the reinsurance industry and is subject to legal proceedings in the normal course ofbusiness. While it is not practicable to estimate or determine the final results of all pending orthreatened legal proceedings, management does not believe that any such proceedings (includinglitigation) will have a material effect on its results and financial position.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76156": { "value": "20. Earnings (loss) per shareThe following reflects the earnings (loss) and share data used in the basic and diluted loss per sharecomputations:20232022Year ended 31 December$m$mTotal comprehensive income (loss)190.8(43.9)NumberNumberBasic weighted average number of shares160,103,836163,441,264Dilutive effect of equity-based incentives461,091167,093Diluted weighted average number of shares160,564,927163,608,357Earnings (loss) per sharePer share $Per share $Basic1.19(0.27)Diluted1.19(0.27)Equity-based incentive awards are only treated as dilutive when their conversion to common shares woulddecrease earnings per share or increase loss per share from continuing operations. Incremental shares fromordinary restricted share options where relevant performance criteria have not been met are not included inthe calculation of dilutive shares.", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76339": { "value": "21.Related party disclosuresThese consolidated financial statements include CHL and the entities listed below:Subsidiary undertakingsDomicilePrincipal BusinessCHLBermudaHolding company, Ultimate parentCRLBermudaGeneral insurance businessCRSLEngland and WalesSupport servicesCML1BermudaSupport servicesCSLBermudaSupport servicesEBTJerseyEmployee benefit trust1.CML is part-owned by members of management. Management\u2019s share ownership in CML exists solely for thepurposes of the Group\u2019s management share incentive scheme for attracting and retaining talent. Management\u2019sshares in CML have no voting power or control in respect of CHL's ownership of CRL via CML's ownership of CRL.Unless otherwise stated, Conduit owns 100% of the share capital and voting rights in thesubsidiaries listed.Employee benefit trustThe EBT was established with the sole purpose of administering Conduit's equity-based incentiveschemes. The trustee operates the trust for the benefit of Conduit's employees, all in accordancewith an established trust deed. While Conduit does not have legal ownership of the EBT, the trustis consolidated in Conduit's accounts due to the ability that Conduit has to influence the actions ofthe trust.Funding for the trust is provided by CHL through a non-interest bearing loan facility. The facilitymay only be used by the trustee for the purpose of achieving the objectives of the EBT. Duringthe year ended 31 December 2023, advances of $13.7 million (31 December 2022: $16.5 million)were made to the trust.CHL common shares purchased by the EBT will be held for the benefit of employees under CHL'svariable incentive schemes. During the year ended 31 December 2023 the trust purchasedcommon shares of 2,336,000 (31 December 2022: 4,341,000).On 18 May 2023, CHL completed the transfer of 757,823 common shares held in treasury with avalue of $3.6 million to the EBTDuring the year ended 31 December 2023 the EBT distributed 250,963 shares with a value of$0.9 million to employees. There were no distributions for the year ended 31 December 2022.Stabilitas ReStabilitas Re Limited a special purpose vehicle (Stabilitas Re), was launched in June 2023.Conduit sponsored the launch of a catastrophe bond issued by Stabilitas Re and CRL enteredinto a collateralised reinsurance agreement with Stabilitas Re as part of the transaction. Thecatastrophe bond was issued to third-party investors by Stabilitas Re. Conduit has no ownershipinterest in nor any control over Stabilitas Re and therefore does not consolidate that entity.Key management compensationRemuneration for key management of Conduit\u2019s Executive Group, and Non-Executive Directors, wasas follows:20232022Year ended 31 December$m$mCash compensation9.14.7Equity-based incentive expense1.81.4Directors fees and expenses0.80.8Total11.76.9year. Prior year comparatives have not been re-stated as they were not deemed to be key management for that year.Loans to employees, including key management, to assist with environmental and other projects,have been made by CSL. These loans are short term and interest free. Any financial benefit to theemployee is generally not material.Non-Executive Directors do not receive any benefits in addition to their agreed fees and expenses anddo not participate in any of Conduit\u2019s incentive, performance or pension plans.IncubEx, Inc.Effective 9 April 2021, CHL executed a stock purchase agreement with IncubEx, a product andbusiness development firm with a focus on designing and developing new financial products inglobal environmental, reinsurance and related commodity markets. CHL purchased 624 sharesof IncubEx\u2019s Series A-3 preferred stock, with a par value of $0.0001 per share, for an aggregatepurchase price of $50,000, or $80.08 per share.The current Executive Chairman of CHL is also a founder and current Chairman of IncubEx.The terms and conditions of the stock purchase agreement are equivalent to those that wouldprevail in an arm\u2019s length transaction. The investment in IncubEx is included in other assets in theconsolidated balance sheet and is recorded at cost, which approximates fair value.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f77114": { "value": "Changes to presentation and disclosureUnder IFRS 4 separate assets and liabilities were recognised for premium receivables, deferredacquisition costs, unearned premiums, and loss and loss adjustment reserves. These assets andliabilities were shown aggregated for all reinsurance contracts, separately for ceded. IFRS 17groups the reinsurance assets and liabilities by portfolio, as defined by Conduit\u2019s level ofaggregation accounting policy in note 2, separately for reinsurance contracts issued and cededreinsurance contracts held and presents a net asset or liability for the portfolio as a whole. Thismeans that different portfolios could be in an asset or liability position depending on the timingof cash flows.The consolidated statement of comprehensive income (loss) has changed significantly in itspresentation. Previously Conduit reported items such as gross premiums written, net premiumsearned and loss and loss adjustment expenses. Under IFRS 17, the standard defines and requiresseparate presentation of reinsurance revenue and reinsurance service expenses. Conduit haschosen to present income and expenses from ceded reinsurance contracts as separate line items.", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f78329": { "value": "Subsequent eventsDividendsOn 20 February 2024, Conduit\u2019s Board of Directors declared a final dividend for 2023 of$0.18 (approximately \u00a30.14) per common share, which will result in an aggregate payment of$29.7 million. The dividend will be paid in pounds sterling on 24 April 2024 to shareholders ofrecord on 22 March 2024 (the Record Date) using the pound sterling / US dollar spot exchangerate at 12 noon on the Record Date.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f82463": { "value": "Conduit Holdings Limited", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f82464": { "value": "Conduit Holdings Limited", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f82465": { "value": "Conduit Holdings Limited", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:21380085AE62D1BXSF19", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }