Conduit Re grows 38% at renewals, secures retrocession to keep PML’s unchanged

Conduit Re, the Bermuda headquartered global reinsurance company, has continued to grow its underwriting portfolio at the January 2024 renewals, adding 38% in premiums written with a 3% risk-adjusted rate increase, but keeping its PML’s relatively flat thanks to the use of retrocession.

Conduit Re had launched in time for the 2021 underwriting year, so the January renewals signal the start of a fourth year of market-facing business for the pure-play reinsurance company, and the steady expansion continues.

Citing “attractive underwriting conditions” at the January 2024 reinsurance renewals, Conduit Re noted continued growth in all its target lines of business, but with particular expansion into the property line this year.

Trevor Carvey, Chief Executive Officer, commented, “We are pleased to report a very strong 1 January 2024 renewals season with estimated ultimate premiums written up 38% year-on-year. The quality and structure of the business being written is exactly where I want it to be, and our business platform is readily supporting our continued growth. We look forward to capitalising on the high quality growth opportunities in this market with much optimism.”

For Conduit Re, estimated ultimate premiums written at the 1/1 2024 renewals increased by 38% to $582.4 million, up from the $421.2 million written at January 1 2023.

The company cites, “Very strong levels of renewing business with our key partners, complemented by high quality new business,” while in terms of where its focus was, the reinsurer said it saw, “Attractive underwriting opportunities in property and specialty resulting in increased weighting towards these segments,” while on casualty risks, Conduit Re said it remains selective.

Overall, Conduit Re reports a positive 3% risk-adjusted rate change, net of inflation, which demonstrates continued hardening in the portfolio for the reinsurer.

The reinsurer says it remains well-positioned to grow, with a legacy-free portfolio.

Gregory Roberts, Chief Underwriting Officer, said, “Our 2024 renewals season was again characterised by a high level of renewing business and positive rates in our property and specialty books. We continue to see high submission levels of attractive business and, being selective around lines, rates and structure, we continue to grow the portfolio significantly without sacrificing quality. We saw more attractive risk versus reward in the property and specialty segments and therefore we focused growth in these classes over casualty.”

The property book has grown 58% in premiums at the January renewals, a significant increase, while casualty actually shrank by 10% and specialty was up 52%.

In pricing terms, property reinsurance renewals saw a 5% positive risk-adjusted rate increase, net of inflation, but that’s down considerably on the January 2023 figure of 39%.

However, it’s worth noting that 5% comes on top of the 39% rate increase from the prior year, so it’s no surprise to see Conduit Re looking to capitalise on the property reinsurance rate environment and growing its book significantly there.

Importantly though, despite all this growth, Conduit Re said that it has kept its successfully secured a renewal of its retrocession program, which it says means there has been “no material changes in our net PMLs at 1 January.”

For there to be no material change in probable maximum loss, despite all of this property reinsurance growth, it’s safe to assume the retro program has grown to manage this risk exposure for Conduit Re.

The company said the renewed retrocession tower for 2024, “continues to provide a balanced risk versus reward profile.”

In addition, the retrocession has been secured from a “diverse and high-quality panel,” Conduit Re said.

The company said that the successful January renewals outcome shows, “Conduit Re’s ability to continue to grow the business in an environment of risk-adjusted rate improvements in an already hard market,” adding that “Conduit is well capitalised and anticipates continued year-on- year growth.”

Conduit Re had forecast a continuation of attractive market conditions at the 1/1 2024 renewals and has clearly taken its opportunity to further build-out its market footprint while rates remain higher.