AM Best has revised its outlook on Conduit Reinsurance Limited (Conduit Re), based in Bermuda, to positive from stable. The agency also affirmed the company’s financial strength rating of A- (Excellent) and long-term issuer credit rating of “a-” (Excellent).
The ratings reflect Conduit Re’s very strong balance sheet strength, adequate operating performance, limited business profile, and enterprise risk management that AM Best considers appropriate for the company’s operations.
Conduit Re, launched in December 2020, has experienced steady growth. For 2024, AM Best expects the company to generate reinsurance service revenue of approximately US$800 million, up from US$633 million in 2023.
Over the first nine months of 2024, Conduit Re wrote gross premiums of US$957.3 million, aligning closely with its business plans. The revised positive outlook reflects expectations that the company’s underwriting portfolio will continue to grow and diversify profitably, albeit at a slower pace than in previous years.
Conduit Re’s management has demonstrated its ability to adjust to market conditions while meeting key strategic goals. This adaptability has been a factor in AM Best’s decision to revise the outlook, signaling confidence in the company’s future performance.
The company’s capital base is bolstered by high-quality capital, a conservative investment approach focused on fixed maturity securities, and a reinsurance program characterized by excellent credit quality.
Conduit Re’s operating performance, assessed as adequate by AM Best, reflects initial volatility during its start-up phase and its subsequent results. The company reported its first annual profit in 2023, totaling US$205.8 million, driven by strong underwriting and investment returns.
For the first six months of 2024, Conduit Holdings Limited reported a profit of US$98.1 million, an increase from US$78.6 million during the same period in 2023. However, the company’s full-year 2024 results are expected to be tempered by exposure to catastrophe and large-loss events in the second half of the year.
Looking forward, AM Best anticipates solid combined ratios for Conduit Re, supported by favorable market conditions and improved expense ratios as revenue continues to grow.
Conduit Re’s risk management framework and internal controls have matured alongside the company’s growth. AM Best considers the reinsurer’s risk management capabilities to be well-aligned with its risk profile.
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