Conduit Re leaps to first major profit, retains upstart growth pace
Upstart reinsurer Conduit Re broke through into its first year of major profits on a surge in underwriting income witnessed by a major decline in the group's loss ratios while start-up-style top line growth continued apace.
The group’s reinsurance service result, IFRS17’s new take on underwriting earnings, rose nearly 18 times against adjusted prior year figures to $183.6 million.
“Across all three divisions, the underwriting teams navigated the market well, being focused in choosing their preferred spaces to play and allocating our capacity to those where we saw the best opportunities and returns,” CEO Trevor Carvey said.
The net loss ratio fell a heady 30.2 percentage points from 88.4% to 58.2%. That, along with minor improvements on expense ratios, pulled the combined ratio out of technical loss readings to 81.9%, or 72.1% on the IFRS17 cash-discounted method with its cost-of-money bonus for long-tail lines.
Conduit Re clearly benefitted from the tightening of terms and conditions embedded in the 2023 reinsurance market reset. But the lack of major event headlines also helped against a prior year still bearing scars from Hurricane Ian and the war in Ukraine.
“In an active natural catastrophe year for the industry, no major event loss, individually or in aggregate, had an outsized or material impact on Conduit during the 2023 year,” management said.
The growth story retained its start-up proportions, both in gross premium written and, as early broker commentary suggested, as a prior shift into property and specialty quota-share pushed earned-in revenue growth measures even higher.
Gross premiums written for the year rose nearly 50% to $931.4 million on an overall portfolio risk- and inflation-adjusted rate change of 16%, led by a 30% price gain in property and a 9% gain in specialty lines. Casualty pricing for Conduit Re's underwriting in 2023 came in flat.
By line, specialty GWP rose 91% y/y, providing 29% of the year on year growth and increasing its portfolio allocation by 4.3 percentage points to 20%. Property GWP growth followed with a 62.5% y/y gain to account for 58% of nominal growth and add 4.0 points to weighting to 50.3%. Casualty lines, with gross premium up 17%, lost 8.3 points from their portfolio weighting to just under the 30% mark.
By the bottom line, including a return to investment profits of $70.6 million after the 2022 bond slaughter, Conduit Re bragged of comprehensive income of $190.8 million, a 22.0% return on equity for the full year.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
