Pembroke, Bermuda - 25 January
2024
Pembroke,
Bermuda - 25 January 2024
Conduit Holdings Limited
("CHL" LSE ticker: CRE)
January 2024 Trading
Update
38% growth in estimated ultimate
premiums written; positive risk-adjusted rate change;
attractive underwriting
conditions
CHL, the ultimate parent company of Conduit Re, a
pure-play Bermuda-based reinsurance business, today provides a
Trading Update in relation to the 1 January 2024 renewal
season.
Trevor Carvey, Chief Executive
Officer, said:
"We are pleased to report a very
strong 1 January 2024 renewals season with estimated ultimate
premiums written up 38% year-on-year. The quality and structure of
the business being written is exactly where I want it to be, and
our business platform is readily supporting our continued growth.
We look forward to capitalising on the high quality growth
opportunities in this market with much optimism."
Key highlights of 1 January
renewals
• Estimated
ultimate premiums written of $582.4 million:
• Increase
of 38% versus the 1 January 2023 renewal season of $421.2
million
• Very
strong levels of renewing business with our key partners,
complemented by high quality new business
•
Attractive underwriting opportunities in property and specialty
resulting in increased weighting towards these segments
•
Continued selective approach to casualty lines to maintain stable
combined ratio expectations year-over-year
• Further
hardening of portfolio rate demonstrated by 3% risk-adjusted rate
change, net of inflation
• Outwards
retrocession programme secured successfully - no material changes
in our net PMLs at 1 January
• Conduit Re
continues to have a strong, legacy-free balance sheet and is well
placed to continue to grow in the current market conditions
Underwriting activities
The split of estimated ultimate premiums written by
class of business at 1 January 2024 was:
Segment
|
2024
$m
|
%
|
2023
$m
|
%
|
Year-on-year change %
|
Property
|
311.0
|
54%
|
197.3
|
47%
|
58%
|
Casualty
|
101.4
|
17%
|
112.2
|
27%
|
-10%
|
Specialty
|
170.0
|
29%
|
111.9
|
26%
|
52%
|
Total
|
582.4
|
100%
|
421.4
|
100%
|
38%
|
Pricing
Conduit Re's year-on-year renewal business written at
1 January 2024 shows an overall risk-adjusted rate change, net of
inflation, of 3%:
Segment
|
2024
January renewals
|
2023
January renewals
|
Property
|
5%
|
39%
|
Casualty
|
-2%
|
1%
|
Specialty
|
2%
|
14%
|
Weighted
|
3%
|
19%
|
These net rate changes reflect management's
assessment of rate changes of Conduit Re's renewed business net of
the impact of claims inflation, exposure changes and changes in any
other terms and conditions.
Gregory Roberts, Chief Underwriting
Officer, commented:
"Our 2024 renewals season was again
characterised by a high level of renewing business and positive
rates in our property and specialty books. 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. We saw more
attractive risk versus reward in the property and specialty
segments and therefore we focused growth in these classes over
casualty."
Outlook
The January renewals represent a key renewal period
for both the business and industry and are considered a primary
indication point for pricing in the reinsurance market. The 1
January renewals period has shown Conduit Re's ability to continue
to grow the business in an environment of risk-adjusted rate
improvements in an already hard market. Conduit is well capitalised
and anticipates continued year-on-year growth.
We will announce our 2023 year-end financial results
on 21 February 2024.
Webcast
Conduit Re's management will host a live question and
answer session for analysts and investors via a webcast and
conference call on Thursday 25 January 2024 at 12.00 noon UK time /
8.00 am Bermuda time.
To access the live webcast, please register in
advance here:
https://www.lsegissuerservices.com/spark/ConduitHoldingsLtd/events/1fbddde1-f68f-4075-b193-4800932a5bb2
To access the live conference call, please register
to receive unique dial-in details here:
https://registrations.events/direct/LON68124
A recording of the conference call will be made
available on the Investors section of Conduit Re's website at
www.conduitreinsurance.com from approximately 4:00 p.m. UK time on
25 January 2024.
Media contacts
H/Advisors Maitland - Vikki Kosmalska / Genevieve
Ryan
+44 (0) 207 379 5151
conduitre@h-advisors.global
Investor relations and other
enquiries
info@conduitreinsurance.com
Panmure Gordon (Joint Corporate
Broker)
+44 (0) 207 886 2500
Berenberg (Joint Corporate
Broker)
+44 (0) 203 207 7800
Peel Hunt (Joint Corporate
Broker)
+44 (0) 207 418 8900
About Conduit Re
Conduit Re is a pure-play Bermuda-based reinsurance
business with global reach. Conduit Reinsurance Limited is licensed
by the Bermuda Monetary Authority as a Class 4 insurer. A.M. Best
has assigned a Financial Strength Rating of A- (Excellent) and a
Long-Term Issuer Credit Rating of a- (Excellent) to Conduit
Reinsurance Limited. The outlook assigned to these ratings is
stable.
Conduit Holdings Limited is the ultimate parent of
Conduit Reinsurance Limited and is listed on the London Stock
Exchange (ticker: CRE). References to "Conduit" include Conduit
Holdings Limited and all of its subsidiary companies.
Learn more about Conduit
Re
Website: https://conduitreinsurance.com/
LinkedIn: https://www.linkedin.com/company/conduit-re
Important information
(disclaimers)
This announcement contains inside information for the
purpose of the Market Abuse Regulation (EU) No 596/2014 (which
forms part of UK domestic law pursuant to the European Union
(Withdrawal) Act 2018, as amended).
This announcement includes statements that are, or
may be deemed to be, "forward-looking statements". These
forward-looking statements may be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "plans", "goals", "objective", "rewards",
"expectations", "signals", "projects", "anticipates", "expects",
"achieve", "intends", "tends", "on track", "well placed",
"continued", "estimated", "projected", "upcoming", "may", "will",
"aims", "could" or "should" or, in each case, their negative or
other variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, targets, future events or
intentions. Forward-looking statements include statements relating
to the following: (i) future capital expenditures, expenses,
revenues, unearned premiums pricing rate changes, terms and
conditions, earnings, synergies, economic performance,
indebtedness, financial condition, dividend policy, claims
development, losses and loss estimates and future business
prospects; and (ii) business and management strategies and the
expansion and growth of Conduit's operations.
Forward-looking statements may and often do differ
materially from actual results. Forward-looking statements reflect
Conduit's current view with respect to future events and are
subject to risks relating to future events and other risks,
uncertainties and assumptions relating to Conduit's business,
results of operations, financial position, liquidity, prospects,
growth and strategies. These risks, uncertainties and assumptions
include, but are not limited to: the possibility of greater
frequency or severity of claims and loss activity than Conduit's
underwriting, reserving or investment practices have anticipated;
the reliability of catastrophe pricing, accumulation and estimated
loss models; the actual development of losses and expenses
impacting estimates for claims which arose as a result of recent
loss activity such as the Ukraine crisis, Hurricanes Ian, Ida, and
Idalia, the European storms and floods in 2021 and 2022 and, the
earthquake in Turkey and wildfires in Canada and Europe; the impact
of complex causation and coverage issues associated with
attribution of losses to wind or flood damage; unusual loss
frequency or losses that are not modelled; the effectiveness of
Conduit's risk management and loss limitation methods, including to
manage volatility; the recovery of losses and reinstatement
premiums from our own reinsurance providers; the development of
Conduit's technology platforms; a decline in Conduit's ratings with
A.M. Best or other rating agencies; the impact that Conduit's
future operating results, capital position and ratings may have on
the execution of Conduit's business plan, capital management
initiatives or dividends; Conduit's ability to implement
successfully its business plan and strategy during 'soft' as well
as 'hard' markets; the premium rates which are available at the
time of renewals within Conduit's targeted business lines and at
policy inception; the pattern and development of premiums as they
are earned; increased competition on the basis of pricing, capacity
or coverage terms and the related demand and supply dynamics as
contracts come up for renewal; the successful recruitment,
retention and motivation of Conduit's key management and the
potential loss of key personnel; the credit environment for issuers
of fixed maturity investments in Conduit's portfolio; the impact of
the ongoing conflicts in Ukraine and the Middle East, the impact of
swings in market interest rates, currency exchange rates and
securities prices; changes by central banks regarding the level of
interest rates and the timing and extent of any such changes; the
impact of inflation or deflation in relevant economies in which
Conduit operates; Conduit becoming subject to income taxes in
Bermuda, the United States or in the United Kingdom; and changes in
insurance or tax laws or regulations in jurisdictions where Conduit
conducts business. Forward-looking statements contained in this
trading update may be impacted by the escalation or expansion of
the Ukraine conflict on Conduit's clients, the volatility in global
financial markets and governmental, regulatory and judicial
actions, including coverage issues.
Forward-looking statements speak
only as of the date they are made. No representation or warranty is
made that any forward-looking statement will come to pass. Conduit
disclaims any obligation or undertaking to update or revise any
forward-looking statements contained herein to reflect actual
results or any change in the assumptions, conditions or
circumstances on which any such statements are based unless
required to do so by law or regulation. All subsequent written and
oral forward-looking statements attributable to Conduit and/or the
group or to persons acting on its behalf are expressly qualified in
their entirety by the cautionary statements referred to
above.
"Estimated ultimate premiums written" is the
estimated total gross premiums written (excluding reinstatement
premiums) that is expected to be earned assuming all bound
contracts run to the end of the period of cover, after management
discount for prudence. "Estimated ultimate premiums written"
reflects underwriter expectations at time of writing and involves
significant judgement. Prior year comparative figures reflect those
presented in Conduit's previously published Trading Update and are
not intended to present a current view of underwriting year
expectations for prior periods. We caution against using estimated
ultimate premiums written for anything other than understanding how
we view 1/1 on this basis in comparison to prior periods. This
figure is not representative of revenue recorded in the IFRS
financial statements.
The Conduit renewal year on year indicative pricing
change measure is an internal methodology that management uses to
track trends in premium rates of a portfolio of reinsurance
contracts. The change measure is specific for our portfolio and
reflects management's assessment of relative changes in price,
exposure and terms and conditions. It is also net of the estimated
impact of claims inflation. It is not intended to be commentary on
wider market conditions. The calculation involves a degree of
judgement in relation to comparability of contracts and the
assessment noted above, particularly in Conduit's initial years of
underwriting. To enhance the methodology, management may revise the
methodology and assumptions underlying the change measure, so the
trends in premium rates reflected in the change measure may not be
comparable over time. Consideration is only given to renewals of a
comparable nature so it does not reflect every contract in the
portfolio of Conduit contracts. The future profitability of the
portfolio of contracts within the change measure is dependent upon
many factors besides the trends in premium rates.