Class of 2021 reinsurance start-up, Conduit Re, has reported a comprehensive loss of $42 million for its first year of operations, after incurring heavy catastrophe losses.
The company’s natural catastrophe bill for the year was $53.8 million, which resulted in an overall underwriting loss of $7.0 million.
Catastrophes also contributed 27.7% to a high loss ratio of 73.2% and a combined ratio of 119.4%.
The largest impacts for Conduit Re came from Hurricane Ida and the European floods in Q3, which cost $15.0 million and $12.1 million, respectively, or roughly half the entire catastrophe bill.
But despite the loss, Conduit Re says the $458.5 million of premiums it wrote during 2021 were in line with its first year plan, and it reportedly gained strong momentum at the January 2022 renewals, with premiums written up 74% to $268.2 million.
The firm has also seen improvements in pricing and terms and conditions, which have continued to improve across all its core classes of business, with the greatest impact being felt in the underlying primary markets.
Going forward, it plans to focus in particular on quota share business, where it sees the best balance between price and risk, with higher acquisition costs but less volatility in the underlying loss ratio.
Property made up $205.0 million of Conduit Re’s premium total in 2021, split 46.6% towards quota share policies, 17.2% towards excess of loss, and 36.2% towards quota share excess of loss, with an indicative renewal price index of 12.2%.
Casualty premiums, meanwhile, amounted to $182.4 million, made up of 93.6% quota share and 6.4% excess of loss, while specialty premiums were $71.1 million, with quota share accounting for 80.0%, excess of loss for 13.4% and quota share excess of loss for 6.6%.
Conduit Re also disclosed that ceded reinsurance premiums were $32.6 million for 2021, with the majority of cover purchased on an excess of loss basis, with the remaining cost relating to reinstatement premiums stemming from the catastrophe loss events which occurred during the year.
Net investment income for the year was $5.5 million, or $3.1 million when including net realised gains and losses, and net changes in unrealised gains and losses.
“To have accomplished the goals we set ourselves for our first year has been an outstanding achievement for Conduit Re,” said Group CEO Trevor Carvey. “For me, the highlight has been the development of our non-cat account which represents 69% of our premium income.”
“Our selective and technical approach to underwriting the business, together with ongoing favourable market conditions, have allowed us to construct a high-quality and diversified core portfolio in what has been a year of significant losses for the industry,” Carvey continued. “We have been able to minimise our exposure to the volatility of the year’s external events and our hard work and discipline should reap rewards in the coming years.”
Neil Eckert, Group Executive Chairman, also commented: “Market conditions are attractive and we are anticipating further rate hardening during 2022. Our CEO Trevor Carvey and his team have achieved a huge amount in our first year of operations and built a well-balanced underwriting portfolio. As we enter our second year, our January 2022 premiums were ahead of management expectations. I am confident that Conduit Re will deliver on its long term objectives.”
