Update: Bermuda-Based Reinsurer Conduit Holdings’ Stock Rises After $1.1B London IPO

By Swetha Gopinath | December 2, 2020

Conduit Holdings Ltd. rose as the Bermuda-based reinsurer started trading in London after an 826 million-pound ($1.1 billion) initial public offering.

The stock climbed as much as 7% to 534.9 pence from the offering price of 500 pence. The company sold 164.1 million shares, according to a statement Wednesday. The order book closed on Tuesday, two days earlier than planned.

The newly established underwriting business is betting on rising prices for commercial insurance. Its cost, which had already been increasing for the last few years, has jumped as the coronavirus pandemic raises risks across multiple lines of business.

And while insurers and reinsurers have been roiled by the spread of the virus, leading to billions of dollars in claims, Conduit doesn’t have the burden of a legacy portfolio. The company plans to write reinsurance in the property, casualty and specialty classes, and is targeting a dividend payout of 5% to 6% of equity capital as early as in 2021, according to its prospectus.

Longtime insurance executives Neil Eckert and Trevor Carvey set up Conduit to capitalize on “an exceptional” market opportunity with years of losses and the recent strain on the industry during the pandemic producing “major corrections” in reinsurance pricing as well as policy terms & conditions, the company said.

Two large UK investors bought over 10% of the deal each, according to a person familiar with the matter. The entire offering was taken up by only 60 funds, the majority of which long-only strategies, the person said. About 20% of the demand came from U.S. mutual funds, the person said.

Conduit is the largest listing in the UK this quarter and contributes to a late-year surge in IPO proceeds. About $10.7 billion has been raised in London this year, compared with $8 billion over the same period last year, according to data compiled by Bloomberg.

Jefferies Group LLC and Panmure Gordon & Co. are joint global coordinators and bookrunners on Conduit’s IPO.

–With assistance from David Hellier.

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