The re/insurance industry has witnessed a “structural shift” in the marketplace throughout the 1/1 renewals, says Trevor Carvey, Chief Executive Officer, Conduit Re.
During Conduit’s 1/1 renewals trading update conference call, Carvey stated that the rise in inflation that has been emerging through has been recognised by both the client base and reinsurers.
“On top of that, you then put the stresses and strains of cat events and the large events through the year, mark-to-market impact on impacting reinsures equity levels, and that’s the situation that we found ourselves in the market,” he said.
“It’s been a rough ride for the industry in the market, but it’s a great place for us to be in.”
Carvey highlighted how manmade losses also have a huge impact on the industry. He cited how the ongoing conflict in Ukraine is a reminder of just how significant those types of events can be, and just the degree to which both reinsurers and insurers need to “keep the defences up” around those types of events.
Earlier this week, the firm reported continued expansion at the 1/1 renewals, with its ultimate premiums written at $421.4 million, up 60% from 2022’s $262.6 million.
Carvey noted that leading into the renewal season, Conduit saw property and specialty as being its main areas for opportunity, and within both lines, that is where the firms portfolio has mostly grown from.
Further, Conduit Re cited a significant 19% risk-adjusted rate change across its January renewal portfolio, which included Casualty running at 1%, which Carvey highlighted as being a stable book of business.
“We spent two years building that up, seen an enormous amount of submissions and we are sitting behind that alongside some really solid industry players. It’s all about knowing the entity that you’re partnering with, and the level of the data that they provide you and how that is being managed by them. And we have great transparency on those accounts that we write. We still see an awful lot that doesn’t make our hurdle and casualty. But year on year, a 1% risk adjusted rate is fine by us.”
A major area that Carvey highlighted within the renewal update was acquisition costs, as he noted that for new business, the firm saw reduced acquisition particularly on its property and specialty lines.
“In those areas, particularly around quota share where we are in a more of a leading or driving position, we’re able to negotiate reduced acquisition costs on a considerable number of contracts. And that went through on the new side as well, when we saw new business we were able to bind those at probably lower term than would have been expected a year ago. And again that helps in the build-up of our business and combined ratio targets.”
