Conduit Re scratches out year-two underwriting gain, top line up 2.5x

Upstart property, casualty and specialty reinsurer  Conduit Re scratched its way to a fractional underwriting profit in its second full year of operations on a 148% increase in annual net premium earned.

Management put the premium gain to “strong renewals and significant new business, plus continued recognition of quota share premiums from the prior year.” Written premium, both gross and net, rose circa 68% year on year.

“We have seen exceptional growth, supported by our legacy-free balance sheet and a strong capital base,” CEO Trevor Carvey (pictured) said.

“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.”

With the net loss ratio down 1.5 percentage points to 71.7% and the increase in scale for the upstart cutting sales expense ratios and halving the other OPEX ratio, Conduit Re moved to a fractional underwriting profit of $0.3 million. The accident year loss ratio for 2022, including the impact of foreign exchange revaluations, was 72.9% compared to 73.2% for 2021. Previously released estimates on the impact of Hurricane Ian and the Russian war in Ukraine remain intact.

The group now claims $1.1 billion of estimated ultimate premiums written from launch in December 2020 up to end-2022 and claims the next $355 million of unearned premium set to flow into earnings. The 2022 ratio of net premiums earned to net premiums written was 83.0% for the high-growth upstart, compared with 56.1% for the prior year.

Casualty led the 2022 growth with an 83.5% increase in gross written premium to $236.7 million, 37% of the total. Property remains the larger share of the business at $299.6 million in 2022 GWP, or 47% of total on a 63.4% gain. Specialty GWP rose 52.4% to $101.2 million, 16% of the 2022 business.

Conduit Re's overall risk-adjusted rate change, net of claims inflation, came to 4% in 2022, led by a 7% gain in property ahead of a 1% gain in casualty and 2%^ in specialty.

Conditions seen at 1.1 2023 constitute “an enduring environment creating the opportunity for improved margins in our business throughout 2023 and beyond,” management reiterated.

After investment losses and other elements heading to the bottom line, the listed Conduit RE parent claimed a comprehensive loss of $89.7 million, more than double the prior year figure.

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