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Conduit Re posts GWP of $210m for first six months of trading

28th July 2021 - Author: Luke Gallin

Recently launched property and casualty reinsurer, Conduit Holdings Limited, has reported estimated ultimate premiums written of $333.1 million for the first half of 2021, as well as losses related to Winter Storm Uri in the US of $6 million.

Conduit ReIn May, Conduit Re reported a successful first-quarter of trading with estimated ultimate premiums written of almost $200 million.

Another quarter down and the reinsurer’s success has continued with a solid initial H1 of trading, alongside continuing strong broker and client support.

As well as estimated ultimate premiums written of $333.1 million, Conduit Re has reported gross written premiums (GWP) of $210.3 million for the period.

The startup nature of Conduit Re means it does not yet have a renewing book of business. However, the firm tracks the underlying renewal price index where there’s sufficient data to do so.

RMS

For H1, the company’s overall indicative renewal price changes were estimated at +14% for property, +17% for casualty, and +12% for specialty.

Ceded reinsurance premiums reached $21.8 million for the six month period, which the firm says is in line with targets presented in its IPO prospectus.

Conduit Re’s net loss ratio for the period totals 70%, or 57.2% excluding the impacts of Winter storm Uri which are estimated to be $6 million, net of reinstatement premiums.

The firm explains that its exposure to Uri and the financial impact of this loss event would not typically be considered material, but given its net premiums earned base has yet to mature, there is a more meaningful impact for H1 2021.

Currently, the reinsurer’s underwriting portfolio has been more skewed to quota share than originally intended, which is reflected in the higher acquisition expenses than expected. As the underwriting book develops, Conduit plans to reduce this.

Again reflecting the startup nature of the business, the Group’s combined ratio hit 127.2% as it produced a negative ROE of 1.2% for the period.

“Notably, the lag in net premiums earned as a result of writing more quota share means that the expense side of the business, such as incurred losses (for example Winter Storm Uri) and the level of operating expenses, can significantly impact these metrics,” explains the company.

Neil Eckert, Group Executive Chairman, commented: “I am proud of what we have achieved in our first six months as an operating business and we could not have asked for more from our growing team. We are delivering on the plan we set out in our IPO last year and continue on our mission to build Conduit into a leading modern pure play reinsurance franchise.”

On the asset side of the balance sheet, net investment income reached $1.3 million for the first-half of 2021. The total investment return amounted to $0.8 million for the period.

Trevor Carvey, Group Chief Executive Officer (CEO), said: “In our first half year of operations as a global reinsurer, we have hit the ground running and been accepted as a disciplined and supportive reinsurance partner by our brokers and clients who have shown us overwhelming support. We are building a strong team culture of technical discipline, collaboration and transparency which we believe is well received by our customers.

“We have been deliberately more weighted to quota share business than excess of loss in these early stages and I am delighted with the diversity and quality of the book and the pricing we have been able to achieve. Over time, we would expect the balance of excess of loss business to increase as we continue to build out our book. The benefits of our focused and diversified approach to underwriting have meant that we have avoided significant exposures to the large losses that have been experienced in the wider reinsurance industry in the first half of the year.

“We expect our ultimate premium income to be broadly in line with the estimates we set out in our plan, subject to market conditions over the remainder of this year. We have made excellent progress so far, but there is still lots of hard work ahead of us.”

Elaine Whelan, Group Chief Financial Officer (CFO), added: “We are declaring an interim dividend of $0.18 (approximately £0.13) per common share, in line with our previously communicated dividend policy.

“We are pleased with the progress we have made with the operational build-out and development of our systems. Our IPO funds are now fully invested in accordance with our investment strategy and we will maintain a high quality, highly liquid investment portfolio to support our underwriting activities.”

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