Signs of stabilisation in US property excess-of-loss (XoL) reinsurance: Conduit Re

While reporting a strong January 1st 2024 reinsurance renewals, at which it grew its premiums written by 38%, pure-play Bermuda reinsurer Conduit Re has also highlighted some signs of the moderating market environment in US property risks, particularly in excess-of-loss (XoL) business.

Conduit Re this morning reported strong growth, as it grew written premiums at the January renewals by 38%, while securing a 3% risk-adjusted rate increase.

The company grew its property reinsurance book by 58% in premiums, while rate increases for this segment were 5%, risk-adjusted and taking into account inflation.

But that was a significant slow-down on a year ago, when rate increases for Conduit Re’s property reinsurance book were 39%.

Conduit Re has provided some additional insights into market conditions at the key January 2024 reinsurance renewals.

All of which point to the slowing of rates, in property and catastrophe reinsurance, with a more competitive, capital abundant and overall stable market environment seen.

Conduit Re said that the primary admitted market remains disciplined, but noted that the property excess-of-loss (XoL) market is showing signs of stabilisation.

Here, the reinsurer highlights US nationwide property reinsurance program renewals as an area of stabilisation.

One driver of this is that more capacity is now available for higher-layer excess catastrophe reinsurance towers, Conduit Re said.

But the company added that, in its target classes of property reinsurance business, the reinsurer feels “well positioned.”

Going into more detail on the property reinsurance market, Conduit Re said that renewals for its E&S and D&F portfolios “showed continued momentum and provide attractive growth opportunities.”

In European XoL reinsurance, Conduit Re said business “renewed strongly with positive rate and discipline in coverage and separation of perils / exclusions.”

But, in the United States, the reinsurer said that while “US margins remain attractive,” Conduit Re said there has been “some increased price competition seen in high excess layers and some requests for coverage broadening.”

Which points to a stabilisation of property XoL reinsurance in the United States, although for now this is likely largely focused on the nationwide accounts and other carriers that renew at 1/1, so we’ll have to wait for the mid-year renewals to see whether the stabilisation is broad and includes markets like Florida.

Overall, on reinsurance market dynamics, Conduit Re explained, “The reinsurance market environment remains attractive with reinsurer economics benefiting from year-on-year rate increases, higher attachment points and disciplined client behaviour.”

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