AM Best assigns an A- rating to Conduit Re Bermuda

AM Best has assigned a financial strength rating of A- (excellent) with a stable outlook to Conduit Reinsurance Bermuda (Conduit Re).

AM Best said Conduit Re had a very strong balance sheet and adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The very strong balance sheet assessment is underpinned by AM Best’s expectation that Conduit Re will maintain the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio (BCAR), over its five-year start-up phase. It raised funding of $1.1 billion through an initial public offering of its holding company, Conduit Holdings, which has been downstreamed into Conduit Re as capital.

Conduit Re’s adequate operating performance assessment is based on its well-defined business plans, and takes into account its competitive environment and heightened execution risk during the start-up phase.

AM Best noted Conduit Re’s business profile is limited given its lack of competitive position and established distribution network in a competitive reinsurance marketplace, though this is to some extent offset by the experience of its senior management and underwriters.

Conduit Re has a clearly defined ERM framework in advance of writing business, which includes plans to control key risks.