CHL, the parent company of Conduit Re, a multi-line Bermuda-domiciled reinsurer, has confirmed that AM Best has affirmed Conduit Re’s Financial Strength Rating of “A-” (Excellent) and Long-Term Issuer Credit Rating of “a-” (Excellent) and raised the ratings outlook to positive from stable.
AM Best explained that the change in ratings reflects Conduit Re’s ‘very strong’ balance sheet strength, adequate operating performance, limited business profile, and appropriate enterprise risk management.
The revision of the outlooks to positive from stable reflects AM Best’s expectation that Conduit Re’s underwriting profile will continue to grow and diversify profitably, even if at a more modest pace than in the past.
Since its launch in December 2020, Conduit Re has experienced a favourable reception now in its fourth year of operation.
AM Best expects the firm to write reinsurance service revenue of approximately $800 million compared to last year’s $633 million.
For 9M 2024, Conduit Re underwrote gross premiums of $957.3 million, broadly in line with its business plans. The reinsurer’s management has demonstrated its ability to adapt to market conditions, whilst achieving key objectives.
According to Best’s Capital Adequacy Ratio (BCAR), Conduit Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation. The company is expected to manage BCAR comfortably over the strongest threshold as it grows its reinsurance portfolio.
AM Best added, “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.”
Taking a look at the firm’s operating performance, Conduit Re reported its first year of profit in 2023 of $205.8 million, driven by good underwriting and investment returns. Conduit Holdings Limited reported a profit for H1 2024 of $98.1 million, compared to $78.6 million for H1 2023; however, 2024 results are expected to be moderated by exposure to several catastrophes and large loss events in the second half of the year.
Prospectively, AM Best expects Conduit Re to generate solid combined ratios, supported by continued favourable market conditions and lower expense ratios as its revenue grows.
Trevor Carvey, Chief Executive Officer, CHL commented, “We are proud to be recognised by AM Best for our progress and delivery of our strategic objectives as an organisation. This recognition is evidence of our significant achievements over the last four years and the favourable reception we have received in the market.”
AM Best added, “Conduit Re’s management have demonstrated its ability to adapt to market conditions, whilst achieving key objectives. The revision of the outlooks to positive from stable reflects AM Best’s expectation that Conduit Re’s underwriting profile will continue to grow and diversify profitably.”
