Conduit moves forward after first year net loss
The leaders of Conduit Holdings Limited remain optimistic despite a comprehensive loss of $42 million by Conduit Re in its first year of operation.
Preliminary results released today by the Bermudian-based global reinsurer report an underwriting loss of $7 million.
The company reported estimated ultimate premiums written of $458.5 million, which the company said was in line with its first-year plan.
Gross premiums written were $378.8 million, net premiums written were $346.2 million, and net premiums earned were $194.2 million.
Return on equity was minus four per cent.
The net loss ratio was 73.2 per cent, the net acquisition cost ratio was 30.4 per cent, other operating expense ratio was 15.8 per cent, and the operation’s combined ratio was 119.4 per cent – of which 27.7 per cent resulted from natural catastrophes.
Total investment return was minus 0.3 per cent.
Neil Eckert, group executive chairman, said: “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.”
Mr Carvey said: "To have accomplished the goals we set ourselves for our first year has been an outstanding achievement for Conduit Re.
“For me, the highlight has been the development of our non-cat account which represents 69 per cent 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.
“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."
Conduit said its net natural catastrophe related losses in 2021 were $53.8 million.
The company said the largest impact on its net loss ratio from 2021 events were from Hurricane Ida and the European floods, which both occurred in the third quarter of the year.
Conduit’s ultimate loss estimate, net of reinsurance and reinstatement premiums, for these two events is $27.1 million, of which $15 million is in respect of Hurricane Ida and $12.1 million is in respect of the European floods.
The company said a strategic focus on quota share business to access best pricing and terms and conditions resulted in optimal diversification, lower volatility within the portfolio and an embedded pipeline into 2022.
Conduit reported a 2021 indicative renewal rate increase of plus-13.7 per cent.
The company declared a final dividend of $0.18 (approximately 13 pence) per common share (in respect of H2 2021), taking the full-year dividend to $0.36 (approximately 26 pence) per common share in line with its stated dividend policy.
Conduit said there was strong momentum in January 1, 2022 renewals.
Estimated ultimate premiums written are $268.2 million, up 74 per cent on 2021, the company said.
A high-quality submission flow and highly selective underwriting approach led to a c. 20 per cent selection rate.
There was a plus-five per cent net rate change, adjusted for claims inflation, changes in exposure and other relevant terms and conditions, Conduit said.