Conduit Holdings Limited 2021 Preliminary Results Announcement
Conduit Holdings Limited ("CHL" or the "Group") (Ticker:CRE)
Pembroke, Bermuda - 24 February 2022
CHL is today announcing its preliminary results for the year ended 31 December 2021.
"Market conditions are attractive and we are anticipating further rate hardening during 2022. Our CEO Trevor Carvey and his team have achieved a huge amount in our first year of operations and built a well-balanced underwriting portfolio. As we enter our second year, our January 2022 premiums were ahead of management expectations. I am confident that Conduit Re will deliver on its long term objectives."
Neil Eckert Group Executive Chairman
Key highlights:
• From a standing start, approximately $460 million of estimated ultimate premiums written, in line with our first year plan
• Strategic focus on quota share business to access best pricing and terms and conditions resulted in optimal diversification, lower volatility within the portfolio and an embedded pipeline into 2022
• 2021 indicative renewal rate increase of +13.7%
• Combined ratio of 119.4% (of which 27.7% resulted from natural catastrophes)
• Final dividend of US$0.18 (approximately 13 pence) per common share (in respect of H2 2021). This takes the full 2021 dividend to US$0.36 (approximately 26 pence) per common share in line with our stated dividend policy
• Strong momentum in 1 January 2022 renewals:
• 1 January 2022 renewals estimated ultimate premiums written of $268.2 million; up 74% on 2021
• a high-quality submission flow and highly selective underwriting approach, leading to a c.20% selection rate
• +5% net rate change, adjusted for claims inflation, changes in exposure and other relevant terms and conditions
|
Financial highlights ($m) |
12 months ended 31 December 2021 |
|
Estimated ultimate premiums written |
458.5 |
|
Gross premiums written |
378.8 |
|
Net premiums written |
346.2 |
|
Net premiums earned |
194.2 |
|
Underwriting loss |
(7.0) |
|
Comprehensive loss |
(42.0) |
|
Financial ratios (%) |
12 months ended 31 December 2021 |
|
Return on equity |
(4.0) |
|
Net loss ratio |
73.2 |
|
Net acquisition cost ratio |
30.4 |
|
Other operating expense ratio |
15.8 |
|
Combined ratio |
119.4 |
|
Total investment return |
(0.3) |
"To have accomplished the goals we set ourselves for our first year has been an outstanding achievement for Conduit Re.
Trevor Carvey Group Chief Executive Officer
For me, the highlight has been the development of our non-cat account which represents 69% of our premium income.
Our selective and technical approach to underwriting the business, together with ongoing favourable market conditions, have allowed us to construct a high-quality and diversified core portfolio in what has been a year of significant losses for the industry.
We have been able to minimise our exposure to the volatility of the year's external events and our hard work and discipline should reap rewards in the coming years."
Business review
After a successful IPO on 7 December 2020, Conduit Re began its first year of underwriting on 1 January 2021. Consequently, financial comparatives are only provided where available and applicable.
Generally, pricing and terms and conditions have continued to improve across all our core classes of business, with the greatest impact being felt in the underlying primary markets. We consider quota share business to have provided the optimum balance between price and risk as we build our underwriting portfolio and we expect to continue to have an increased weighting towards quota share contracts versus excess of loss business in the near term. While quota share contracts typically have higher acquisition costs associated with them, there tends to be less volatility in the underlying loss ratio.
Our current book has been priced to estimated ultimate loss ratios that are broadly in line with management expectations. As a start-up we reserve our portfolio based on prudent loss estimates, reflecting the early stage of our portfolio's development.
Our combined ratio is further impacted by the full recognition of our ceded reinsurance and other operating expenses, while our gross premium earned is only 49.3% of ultimate premiums written. We expect these factors to normalise over time as the business matures.
The breakdown of our overall ultimate premiums written during 2021 was as follows:
|
Ultimate premiums written ($m) |
Property |
% |
Casualty |
% |
Specialty |
% |
Total |
% |
|
Quota share |
104.8 |
|
174.1 |
|
57.9 |
|
336.8 |
73.5 |
|
Quota share of excess of loss |
68.6 |
|
- |
|
4.3 |
|
72.9 |
15.9 |
|
Excess of loss |
31.6 |
|
8.3 |
|
8.9 |
|
48.8 |
10.6 |
|
Total |
205.0 |
44.7 |
182.4 |
39.8 |
71.1 |
15.5 |
458.5 |
100 |