Conduit Re grows 38% at 1.1, extending pivot to preferred lines
Upstart reinsurer Conduit Re grew its 1.1 renewal book by 38% to $582.4 million on an inflation- and risk-adjusted rate gain of some 3%, extending a major pivot into non-cat property and specialty lines, the company said while presenting its preliminary view to 2023 results.
“We continue to see high submission levels of attractive business and, being selective around lines, rates and structure, we continue to grow the portfolio significantly without sacrificing quality,” management said.
As it did throughout FY2023, Conduit pursued what it considered “attractive underwriting opportunities” in property and specialty while continuing to show a “selective approach” to casualty lines, a hesitancy it justified with the need to “maintain stable combined ratio expectations year-on-year”.
At the 1.1, property grew 58% to $311 million on a 5% price gain. That provided Conduit Re with an eye-opening 71% of its 1.1 growth and added 6.6 percentage points to the 1.1 property book allocation to 53.4%.
Specialty lines followed closely behind with a 52% y/y gain in 1.1 estimated premium, offering 36% of the total portfolio increase and adding 2.6 points to the segment's allocation in the 1.1 book.
Casualty was reduced outright at the 1.1.2024 renewal, with estimated premium down 9.6% year on year to take 9.2 points from the segment allocation to 17.4%, now the smallest segment at Conduit Re.
“With more attractive risk versus reward in the property and specialty segments, we are focusing our growth in these classes over casualty,” management said.
That made the 1.1 exercise a rough extension of trends Conduit Re leveraged for 2023 as a whole where specialty had led growth in percentage terms, followed by property.
Specialty lines rose 91% y/y on 9% adjusted rate growth, providing 29% of the year on year growth and increasing their portfolio allocation by 4.3 percentage points to 20%. Property GWP rose 62.5% y/y on 30% price growth to account for 58% of nominal growth and add 4.0 points to weighting to 50.3%. Casualty lines, with gross premium up 17% against flat pricing, lost 8.3 points from their portfolio weighting to just under the 30% mark.
“The non-catastrophe elements of both property and specialty in particular provided opportunities for selective growth,” management said of its 2023 revenue trends.
The move to non-cat property and specialty left Conduit Re with “no material increase” in the group’s net PMLs at the 1.1.2024 renewals, “which continue to provide a balanced risk versus reward profile.”
But stable PMLs also meant growing retrocession. Conduit Re claimed “successful placement” of its outwards retrocession program at 1.1 with a “diverse and high quality panel.”
FY2023 retrocession costs were said to have risen 58% year on year reflecting additional limits purchased for the growing book, plus price increases on renewals.
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