Third Quarter 2022 Trading Update
Strong premium income growth; positive future earnings benefits from embedded Quota Share premium pipeline; balance sheet strength and underwriting focus put Conduit Re in an excellent position to take advantage of exceptional market conditions.
Conduit Re, a pure-play global reinsurance business based in Bermuda, is today presenting its trading update for the nine months ended 30 September 2022.
Key highlights:
Successful build out of market-leading reinsurance platform
• $600.9 million of estimated ultimate gross premiums written for the nine months ended 30 September 2022, a 55% increase on the nine months ended 30 September 2021
• Underlying business trending towards a mid-80's combined ratio in the medium term
• Strong, legacy-free balance sheet; AM Best A- (Excellent) rating; well placed to write additional business into highly attractive market conditions
High quality book of business with embedded pipeline of premium income and strengthening renewal experience
• $1.1 billion of estimated ultimate premiums written since launch in December 2020
• Year-to-date overall renewal price change of 4%, net of estimated claims inflation
• High-quality quota share business contracted since December 2020 provides an embedded pipeline of premium which is flowing through to income
Exceptionally attractive market conditions exhibiting accelerating improvement in risk-adjusted rate and terms and conditions
• Shortage of reinsurance capacity and increasing demand for reinsurance protection combine to make this a very exciting market for reinsurers
• Underlying inflation dynamic is generating increasing demand for reinsurance as asset values increase whilst the supply of reinsurance has been constrained by withdrawal of capital and capital depletion across the industry
• The 1 January renewal season remains a primary indication point for pricing in the reinsurance market and all signals currently point to a significant acceleration in risk-adjusted rate improvements in an already hardening market
• Conduit Re's strategy, the team's market reputation and Conduit Re's strong and legacy-free balance sheet put it in an excellent position to take advantage of these highly attractive market conditions
Q3 Trading
• Estimated ultimate premiums written up 55% on the nine months ended 30 September 2021, to $600.9 million; gross premiums written up 81% to $528.1 million for the same period
• In a high catastrophe loss year for the industry, Conduit Re's focused risk selection restricted the impact from major loss events; current estimated loss, net of reinsurance and reinstatement premiums, of approximately $40 million from Hurricane Ian and $24.6 million (unchanged) from the Ukraine crisis
• High-quality (AA average credit) investment portfolio with short average duration of 2.3 years; unrealised investment losses driven by rising rates are expected to unwind as the securities mature; opportunity to reinvest at attractive yields.