Conduit Re produces ‘robust underwriting results’ since launch

Bermuda-based Conduit Reinsurance has produced “robust underwriting results” despite several industry-wide catastrophe and large loss events since it was launched in 2020, according to ratings agency AM Best. 

AM Best made the comments as it affirmed the listed re/insurer’s financial strength rating of A- and said the outlook was stable.

“Conduit Re’s operating performance assessment incorporates its business plans along with results achieved in its first years of operation,” AM Best said. “Despite several industry-wide catastrophe and large loss events during its initial years, Conduit Re’s underwriting results have been robust. The company reported a discounted combined ratio of 72.5% under IFRS 17 for the first six months of 2023, and expects good profitability for the year. 

“Over the coming years, AM Best expects Conduit Re to generate solid combined ratios, supported by continued favourable market conditions and lower expense ratios as its revenue grows.”

The ratings agency added that Conduit Re, headed by chairman Neil Eckert and CEO Trevor Carvey, had had a favourable reception from the market since its launch in December 2020, and in its second year of operation (2022) wrote gross written premiums of $637.5 million. 

It added: “Growth ahead of its initial public offering target has been achieved in the first nine months of 2023, with the company writing GWP of $764.4 million (excluding reinstatement premiums under IFRS 17 reporting). 

“The company is broadly on track to achieve its business plan, with management demonstrating its ability to adapt to market conditions. Conduit Re’s risk management framework and internal controls have matured as the company has grown, and risk management capabilities appear to be commensurate with its risk profile.”

AM Best said the ratings reflect Conduit Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

“Conduit Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR),” it said. “The company is expected to manage BCAR comfortably in excess of the strongest threshold as it executes its business plan and grows its reinsurance portfolio. 

“Conduit Re’s balance sheet is supported by high quality capital, a conservative investment strategy focused on fixed maturity securities and a reinsurance programme of excellent credit quality.”