Greg Roberts, Chief Underwriting Officer (CUO) Conduit Re, says he expects strong reinsurance market conditions to persist for “the medium-term, if not longer”, as companies continue to contend with economic challenges and growing catastrophe losses.
Bermuda-based reinsurer Conduit Re reported a comprehensive loss of $89.7 million for 2022, as an investment loss of $52.8 million more than offset a slight underwriting gain in the period.
The company’s loss actually widened from the -$42 million reported a year earlier, but it still produced a small underwriting profit of $0.3 million for 2022, compared with an underwriting loss of $7 million previously.
Speaking in a media call alongside the results, Conduit Re’s leaders discussed the company’s performance and the broader reinsurance market conditions shaping its approach.
Roberts compared the current market to “a rerun of the early 2000s,” when significant hardening followed the World Trade Centre attacks, and was later exacerbated by large catastrophes such as Hurricanes Katrina, Rita and Wilma.
This trend could be seen as being mirrored in the hardening environment from 2018 to 2022, Roberts suggested, followed by the emergence of strong inflation and the impact of Hurricane Ian.
“There was sustained hardening in the market and the market stayed very profitable for about another five to six years after that,” Roberts said of the post-Katrina market, and indicated that reinsurers could be looking at a similar time-frame now.
“We’ve used the word structural,” Conduit Re CEO Trevor Carvey added during the call. “It’s the combination of the cat losses … and the inflationary environment that’s just pushing the underlying loss experience for the back years.”
Carvey also highlighted the increase in asset prices on the property side of business, as areas like home insurance continue to increase in price and life the premium levels in the industry.
“But it’s structural, I think, it’s understood and particularly that casualty inflationary component is understood through whole swathes of the industry,” he explained.
Also speaking to the hard environment, Executive Chairman Neil Eckert highlighted the ongoing issue of constrained capital, and agreed with Roberts in suggesting that it could be some time before this dynamic shifts.
“There is stress out there and that’s not going to be cured anytime soon,” he concluded.
