Conduit Holdings declares near $90 million loss
Conduit Holdings Limited, the holding company of Conduit Re, has preliminarily declared a total comprehensive loss of $89.7 million for the financial year to December 31, 2022.
Conduit Re is the pure-play reinsurance business based in Bermuda.
Trevor Carvey, chief executive officer, commented: "Our planned growth path has continued over the last 12 months while all the time we have maintained our same disciplined approach to risk selection.
“We have seen exceptional growth, supported by our legacy-free balance sheet and a strong capital base. In a year where the industry has experienced extreme natural and man-made losses, the resilience of our results validates our business model.
“Looking forward, we are perfectly positioned to take advantage of the current exceptional market conditions.
“As the business grows, we will see the benefit from increasing efficiencies of scale and the significant pipeline of revenue we have in place which will continue to flow through to earnings. We are excited by our business prospects for 2023."
In just the second year of operation, gross premiums written for the year climbed 68.3 per cent over the year before to $637.5 million.
And in a year with extreme natural catastrophe and man-made losses for the industry, Conduit Re's balanced and diversified portfolio recorded a small underwriting profit of $0.3 million.
The company sees further growth opportunities in the hard market, after an estimated $1.1 billion of ultimate premiums written from company launch in December 2020 up to 31 December 2022.
It noted a significant pipeline of unearned premium of approximately $355 million which will flow through in subsequent years.
Its single office location in Bermuda, the company said, enables dynamic decision making in response to market opportunity.
The earnings report said the company’s experienced team had rapidly developed a reputation for being a responsive, reliable and relevant counterparty.
The company is blessed with a legacy-free balance sheet with ample capacity to support the anticipated growth and AM Best has affirmed the company’s A- (Excellent) rating, citing "very strong" balance sheet strength.
The report said the January renewals season exhibited significant hardening of pricing and terms and conditions and Conduit Re's focused and disciplined approach delivered exceptional 1 January renewals.
The estimated ultimate premiums written at 1 January 2023 were approximately $421.4 million (2022: $262.6 million), an annual increase of 60.5 per cent.
The overall portfolio year-on-year risk-adjusted rate change, net of claims inflation, increased by 19 per cent at 1 January 2023.
There was also reduced acquisition costs on new and renewed business, a continued high renewal retention ratio and the successful placement of planned retrocession coverage.
The analysis stated: “We see this as an enduring environment creating the opportunity for improved margins in our business throughout 2023 and beyond.
“Exceptional pricing environment and continued focus on optimising our portfolio supports acceleration towards a mid-80s combined ratio in the medium-term, to deliver a mid-teens ROE across the cycle.”
Neil Eckert, executive chairman, commented: "We have delivered outstanding premium growth in 2022 and have continued that trajectory at the 1 January 2023 renewals.
“More importantly, we have delivered our first underwriting profit in a year notable for its elevated catastrophe activity.
“Our business has capital to continue its planned growth and to take advantage of the opportunities that we see."
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