For Class of 2021 reinsurance start-up, Conduit Re, market conditions at the January 1st, 2022, renewals were ahead of expectations, leading the company’s Chairman, Neil Eckert, to be optimistic for the months ahead.
Earlier this week, $1.1 billion start-up reinsurer Conduit Re reported its January 2022 trading statement, which showed the firm successfully bound almost $262.6 million of premiums, an annual increase of roughly 70%.
Across its portfolio rates increased by an average of 5%, with property reinsurance leading the way at a rise of 8%.
Speaking recently during a webcast to discuss the trading statement, Chairman Eckert said that rate increases were needed to reflect current inflationary trends, and that the tornadoes in the US and Colorado wildfire in December, created further momentum for pricing.
“Market conditions were, I think, ahead of where we thought they would be,” said Eckert. “We launched the company into what was a technically repricing market, on the back of heavy loss activity.
“Last year ILS capacity was more available and so we responded to that by writing more quota share. This year there was less ILS capacity, due to funds being trapped or withdrawn,” he continued.
At the renewals, 64% of the portfolio was written in quota share form, although the company did see some growth on the excess-of-loss side as well.
All of this, said Eckert, “strengthens our conviction and confirms our timing into the market.”
Group Chief Executive Officer (CEO), Trevor Carvey, noted that the underlying primary rate change remains very strong, “and moving ahead of excess-of-loss in the main.”
Discussing the reinsurer’s quota share, Carvey explained “there’s no doubt in our mind” that it enables it access to “all the the underlying rate dollars.”
“Sharing in all of that ground-up premium is a better way to share in all of that profitability,” he added.
It’s been widely reported that the retrocession market was challenging at Jan 1st, and Carvey told the audience that while Conduit Re’s programme cost more, it still came in under budget.
He also explained that the majority of the programme was placed at 1/1 with more placements to come later in the year, and that Conduit Re welcomed some new participants to its retro panel at the most recent reinsurance renewals.
As well as solid rate momentum, Conduit Re also experienced robust growth in premiums bound.
Year-on-year premium growth of 246% in the casualty reinsurance book and growth of 37% and 36% in the property and specialty book, respectively, were ahead of momentum and Eckert expects additional increases at upcoming renewals.
“There’s been a lot of people withdrawing from catastrophe business in the market. The previous hard market was really about a technical re-rating, but this year we could well see a shortage of capacity as the year develops. So the outlook remains really positive,” he said.
