Conduit Re secures retro, expects to make more purchases

Conduit Re, a Class of 2021 reinsurance start-up that raised close to $1.1 billion of capital for its launch in an IPO, said this morning that it has secured its own outwards reinsurance (retrocession) at the January renewals, noting that it expects to make more retro purchases as the year progresses.

Conduit Re underwrote roughly 70% more business at the January 2022 renewals than it did a year earlier, with Chairman Neil Eckert citing “some of the most attractive market conditions seen in a generation.”

The strong growth means the company will also be buying more retrocession, to protect it against peak exposures and moderate loss impacts to shareholders.

At the January 2022 reinsurance renewals Conduit Re underwrote around $262.6 million of premiums, up from 2021’s $154.4 million, an annual increase of approximately 70%.

The company remained selective though, with a hit rate of just 20% against the submissions received.

Across the Conduit Re renewal portfolio, rates averaged an increase of +5%, with property reinsurance leading the way at +8%.

Conduit Re appears to have targeted casualty reinsurance growth at this renewal season expanding casualty premiums written by +246% year-on-year, while its property book grew +37% and specialty by +36%.

The quota share reinsurance focus at Conduit Re persisted through the January 2022 renewal season, with some 64% of renewals written in quota share form

However, the company has now started to expand the excess-of-loss side of the business as well and the company cited “measured improvements in attachments and terms.”

Neil Eckert, Group Executive Chairman, commented on the outcome of the renewal season, “Conduit Re is benefiting from some of the most attractive market conditions seen in a generation. Our second successful January renewals season reflected the fact that 2021 was the fourth costliest catastrophe year in history for the reinsurance industry and total catastrophe losses for the insurance market over the last five years now amount to over $500 billion. As a new market entrant with a strong capital base, an unencumbered balance sheet and a forward-looking approach to underwriting, we are well positioned to benefit from continued favourable market conditions.”

Trevor Carvey, Group Chief Executive Officer, also said, “In a very late renewal season characterised by a tough stand-off between brokers and underwriters, we saw continuing rate improvements and tightening of terms and conditions across our core classes. This has allowed us to take another big step forward in achieving our long-term goal of building a market-leading reinsurance underwriting franchise.”

Conduit Re said it placed its own outwards reinsurance (retrocession) program successfully at 1/1, but also noted that additional protection may be required.

The reinsurer said that it is likely to make further planned retro purchases throughout 2022, as its portfolio continues to build.

The company is also expecting to continue to deploy more capacity and grow its stature in the reinsurance market.

Looking ahead, Conduit Re expects that the momentum seen at 1/1 2022 will continue through to other renewals across the year, which it said will support its objective of building a high quality reinsurance underwriting franchise.