Bermuda-based reinsurer Conduit Re secured risk-adjusted rate changes of 39% across its property reinsurance portfolio underwritten at the January 2023 renewals, with property premiums written expanding by 81% year-on-year as the company took advantage of the hard market.
Overall, Conduit Re underwrote estimated ultimate premiums of $421.4 million at the 1/1 2023 renewal season, a 60% increase on the previous year.
$197.3 million of these were property reinsurance, as Conduit Re expanded out into the area of the market that was hardening the fastest.
As a result, property risks now make up 47% of Conduit Re’s January renewal portfolio in 2023, compared to 41% a year earlier, as it added 81% in volume for the property class of business.
The reinsurer said that growth has been secured both through new business and its renewals, while higher pricing and improved terms and conditions have been secured across the 2023 portfolio.
Trevor Carvey, Chief Executive Officer, stated that, “This has been an exceptional renewal season. 60% premium growth is the true indication of the underwriting conditions we have experienced. This is manifesting itself across pricing and rates, terms and deductibles, and the strong increase in new business that we have enjoyed. From a capital perspective, we have plenty of room to execute our plan and the growth we anticipate.”
Conduit Re also grew across casualty and specialty lines of business, with premiums rising 31% and 65% respectively.
The reinsurer said market conditions in property reinsurance were “extremely strong”, providing the opportunity to grow its book.
The company also says its combined ratio continues to trend towards the mid-80’s, which it expects will be supported by the improved terms and pricing on the renewal book, as well as reduced acquisition costs.
The pricing environment in reinsurance is “exceptional” right now, according to the reinsurer, and the company feels “well placed to continue to take advantage of further anticipated momentum in rates.”
Gregory Roberts, Chief Underwriting Officer, said, “We experienced a busy and rewarding start to the year. In the 1 January renewals we increased our weighting towards Property and Specialty business, capitalising on an exceptional shift in pricing, while balancing it against our Casualty book, which is still attractively priced. As a team, we are absolutely delighted in the way that we executed the renewals period and feel that we have developed a reputation as being a responsive, reliable and disciplined counterparty. We expect market conditions to continue to offer opportunities for further growth as the year develops.”
Importantly, given the growth in property business which will undoubtedly bring more catastrophe exposure for Conduit Re, the company said its own hedging arrangements were secured on-target.
Roberts explained that, “A highlight was that we successfully secured our retrocession programme in line with our objectives.”
Conduit Re cites a “structural shift in the market- place caused by a fundamental re-pricing of risk and an imbalance in the supply and demand of capital.”
As a result, in 2023 it expects an, “enduring environment creating the opportunity for improved margins in our business across the rest of 2023 and beyond.”
Neil Eckert, Executive Chairman, commented, “This has been an exciting January renewals. Premium up, conditions improving, and our team has had a really good start to 2023. We are continuing to see reserve strengthening across the reinsurance industry, which gives Conduit Re with its legacy-free balance sheet, competitive edge. Conduit Re is now truly through its start-up phase.”