Conduit turns first profit as it capitalizes on hard market

Bermuda-based re/insurance start up Conduit Holdings turned a profit for the first half of 2023, producing net income of $78.6 million compared to a loss of $39.4 million in the same period in 2022 as the company took advantage of the hard reinsurance market.

Conduit, whose operating subsidiary Conduit Re started underwriting in 2021, recorded gross written premiums of $542 million, up 53% from $354 million.

Net reinsurance revenue rose 63% to $243 million from $149 million, while its reinsurance service result was $80.7 million compared to $10.4 million in the prior year period.

Net investment income was $22.6 million compared to a $50 million loss in 2022, as unrealized gains on investments went from a $54.3 million loss to a $5.7 million gain.  

Conduit’s discounted combined ratio was 72.5% compared to 99.9 per cent in 2022.

Conduit CEO Trevor Carvey said: “This has been a very successful half year for Conduit, and we are delivering on the goals we set out when we founded the business in 2020.

“In a half year which has seen high industry losses, our focused underwriting strategy has delivered strong underwriting results which, coupled with our low expense base, have delivered a very attractive combined ratio of 72.5% (83.1% on undiscounted basis).

“With no back years prior to 2021, we continue to look forward to deploying capital effectively, taking maximum advantage of current market conditions, which we see continuing for some time.”

Neil Eckert, executive chairman, added: “We are delighted to announce our maiden interim profit. The low combined ratio and highly attractive return on equity are testament to the effectiveness of our strategy.

“This is one of the hardest insurance markets in a generation and we are very well placed to capitalise on that with our efficient business model.”

Conduit said that it had written $1.9 billion in “ultimate premiums” since inception and expected to see $755 million in unearned premium flow through in future years.

It said market conditions remained favourable, especially for non-catastrophe property and specialty lines, as the hard market looked set to continue.

Total assets rose to $1.3 billion from $1.1 billion while liabilities rose from $186 million to $403 million.