T&D (OTCPK:TDHO.Y) Update / briefing Transcript

Summary of Fortitude Re's Conference Call Company Overview - Company: Fortitude Re, a leading asset-intensive reinsurer, provides tailored reinsurance solutions and is supported by major investors including T&D Holdings and Carlyle [2][3] - Financial Metrics: As of September 30, 2025, Fortitude Re has a balance sheet exceeding $100 billion, with $6.9 billion in capital from investors and over $75 billion in general account reserves [3][4] Key Financial Performance - Growth: Achieved $83 billion in general account reserves, with core operating earnings of $674 million and adjusted net income of $669 million for the nine months ended September 30, 2025 [7][8] - Market Share: Holds over 25% market share in Japan and approximately 10% in North America since 2020 [4][6] - Earnings Stability: Core return on assets remains consistent, with a strong liquidity profile of approximately $5.3 billion [8][9] Strategic Initiatives - Reinsurance Transactions: Completed several block and flow reinsurance transactions adding nearly $10 billion in high-quality reserves [5] - Capital Market Presence: Issued senior notes and launched the first sidecar, FCA Re, with over $700 million in capital dedicated to Asia [5][6] - Risk Management: Emphasizes a robust risk management culture, with a focus on diversification, liability valuation, and asset-liability management [10][11] Investment Portfolio - Asset Allocation: The $82 billion investment portfolio is primarily fixed income (93%), with only 4% rated below investment grade [24] - Private Credit: $17.3 billion in private credit, primarily investment grade, with strong credit performance and no material losses [25][26] - Real Estate Exposure: $13.6 billion in real estate, with a focus on residential mortgages and a low average loan-to-value (LTV) ratio [26][27] Market Dynamics and Competitive Position - Market Segments: Operates in three of six key market segments, with a focus on complex transactions that yield above-market returns [30][31] - Competitive Strength: Maintains a competitive edge through disciplined underwriting, strong investor relationships, and a focus on sticky liabilities [32][39] - Regulatory Environment: Anticipates convergence of global regulatory regimes, which may benefit Fortitude's business model [44][45] Risks and Challenges - Credit Stress: Identified as a primary risk, with concerns over potential defaults and losses in the current geopolitical climate [59][60] - Market Volatility: Acknowledges the potential for market disruptions affecting credit quality, but expresses confidence in the company's resilience due to robust risk management practices [60][61] Future Outlook - Growth Prospects: Optimistic about future profitability and pipeline quality, with expectations for healthy growth in core operating earnings and adjusted net income in 2026 [51][56] - Strategic Focus: Plans to continue responsible growth by selectively underwriting in existing markets while expanding into new ones [37][38] This summary encapsulates the key points discussed during the conference call, highlighting Fortitude Re's financial performance, strategic initiatives, market dynamics, and future outlook.