Berenberg maintains 'buy' rating on Conduit Holdings.
Berenberg reiterated its 'buy' rating on multi-line reinsurer Conduit Holdings on Thursday, stating the group's was a bneficiary of Bermuda's new Tax Credit Act.
Source: Sharecast
On 11 December, Bermuda enacted the Tax Credit Act 2025, which offers incentives for insurers and reinsurers based on the island, providing a part offset to the 15% corporate income tax, which was introduced on 1 January 2025.
Berenberg said that while Conduit Re remains exempt from corporate income tax, as all of its activities are conducted in Bermuda, it now forecasts that the company will also benefit from the Tax Credit Act.
"We believe that this benefit will further reduce Conduit's already low level of other operating expenses and, as a result, we raise our FY25E earnings forecast by $5m, or 6%, to $90m," said the German bank, which has a 700p target price for the stock.
Berenberg added that, based on Bloomberg consensus, Conduit trades on 0.6x FY27 price/book ratio and offers an 11.7% FY27 return on equity.
"We believe that this is a compelling valuation given that Conduit has a strong balance sheet with no debt and its 1.6x covered dividend offers an attractive 6.9% yield."
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