Conduit Re jumps to first annual profit

Bermuda-based re/insurer Conduit Re took advantage of strong pricing and tighter terms and conditions to record its first year of major profits. 

A relatively benign year for losses also contributed to the three-year-old company’s success. 

The group’s reinsurance service result rose nearly 18 times against adjusted prior year figures to $183.6 million.

“Across all three divisions, the underwriting teams navigated the market well, being focused in choosing their preferred spaces to play and allocating our capacity to those where we saw the best opportunities and returns,” CEO Trevor Carvey said.

The net loss ratio dropped 30.2 percentage points from 88.4% to 58.2%. That, along with minor improvements on expense ratios, pulled the combined ratio out of technical loss readings to 81.9%, or 72.1% on the IFRS17 cash-discounted method with its cost-of-money bonus for long-tail lines.

Conduit Re clearly benefited from the tightening of terms and conditions embedded in the 2023 reinsurance market reset. But the lack of major event headlines also helped against a prior year still bearing scars from Hurricane Ian and the war in Ukraine.

“In an active natural catastrophe year for the industry, no major event loss, individually or in aggregate, had an outsized or material impact on Conduit during the 2023 year,” management said.

The company benefited from a prior shift into property and specialty quota-share, driving earned-in revenue growth measures even higher.  

Gross premiums written for the year rose nearly 50% to $931.4 million on an overall portfolio risk- and inflation-adjusted rate change of 16%, led by a 30% price gain in property and a 9% gain in specialty lines. Casualty pricing for Conduit Re's underwriting in 2023 came in flat.

By line, specialty GWP rose 91% y/y, providing 29% of the year on year growth and increasing its portfolio allocation by 4.3 percentage points to 20%. Property GWP growth followed with a 62.5% y/y gain to account for 58% of nominal growth and add 4.0 points to weighting to 50.3%. Casualty lines, with gross premium up 17%, lost 8.3 points from their portfolio weighting to just under the 30% mark.

By the bottom line, including a return to investment profits of $70.6 million after the 2022 bond slaughter, Conduit Re bragged of comprehensive income of $190.8 million, a 22.0% return on equity for the full year.

The company reported a full-year loss of $43.9 million in 2022. 

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