LA wildfire losses at Conduit Holdings Ltd (LSE:CRE) came in higher than expected at US$120 million, weighing on net asset value in the early weeks of its new financial year, and sending its shares down 7.8% to 403p on Wednesday morning.
The impact of the disaster on NAV was around 11%, after last year saw NAV increase 12.9% to $6.70 (£5.35).
CEO Trevor Carvey said: "The California wildfires are a tragic event for the families and communities impacted, as well as a significant loss for the industry, from which Conduit is not immune.
"From an industry perspective, we expect that the wildfires will impact rates in areas of the property portfolio which will flow through to an improved underwriting environment and provide continued opportunities for the company."
While it is only a month and a half into the year, Carvey said the company's current forecast is that it will still deliver a return on equity in the "low to mid-teens" for 2025, assuming reasonable loss activity and investment performance.
For the past year, Conduit reported a 24.8% increase in gross premiums written to $1.16 billion, and a discounted combined ratio of 86.0% up from 72.1% the year before, including the impact of Hurricanes Helene and Milton as well as a series of elevated risk losses.
It highlighted the benefits of asset accumulation on the balance sheet, with net investment income rising 57% to $65 million, while comprehensive income of $125.6 million resulted in a 12.7% return on equity.
A final dividend of $0.18 (circa 14p) per share was declared.
Broker Peel Hunt said the results were 1% ahead of its NAV estimate, with premiums and PBT better than expected and the outlook for 2025 "more finely balanced, starting with a major loss that may drag down our 2025E undiscounted RoE to circa 11%, ceteris paribus".