Conduit unveils H1 results

CHL, the parent company of Conduit Re, a reinsurance firm headquartered in Bermuda, has released its interim results for the six months ended June 30, based on the IFRS 17 accounting standard.

“This has been a very successful half-year for Conduit, and we are delivering on the goals we set out when we founded the business in 2020,” said Trevor Carvey, CEO. “In a half year which has seen high industry losses, our focussed underwriting strategy has delivered strong underwriting results which, coupled with our low expense base, have delivered a very attractive combined ratio of 72.5% (83.1% on [an] undiscounted basis).

“With no back years prior to 2021, we continue to look forward to deploying capital effectively, taking maximum advantage of current market conditions, which we see continuing for some time.”

Executive chairman Neil Eckert said: “We are delighted to announce our maiden interim profit. The low combined ratio and highly attractive return on equity are testament to the effectiveness of our strategy. This is one of the hardest insurance markets in a generation, and we are very well placed to capitalise on that with our efficient business model.”

Key highlights of the 2023 H1 results include:

• Gross premiums written amounted to US$542.2 million, marking a 52.9% increase over the same period in 2022.
• The overall portfolio risk-adjusted rate change for the first half of 2023, net of claims inflation, stood at 15%.
• Strong renewal book with high-quality partners contributed to their positive performance in the third year of trading.
• Despite the active natural catastrophe period, no major event losses significantly impacted their results.
• The combined ratio for the first half of 2023 was 72.5%, contrasting with 99.9% for the same period in 2022.
• Conduit sponsored the issuance of a US$100 million three-year catastrophe bond, enhancing their collateralised reinsurance cover alongside traditional retrocession programs.
• The total reinsurance and other operating expense ratio was 15.0% for the first half of 2023, similar to the same period in 2022 (14.9%).
• They maintain a high-quality investment portfolio with an average credit quality of AA, yielding 3.2%, and market yield of 5.5% (respectively AA, 1.4% and 3.5% for the same period in 2022).
• Total net investment return amounted to US$22.6 million for the first six months of 2023, with a net unrealised gain of US$5.7 million, compared to a net investment loss of US$50 million in the same period last year, which included US$54.3 million of net unrealised loss.
• Comprehensive income for the half-year reached US$78.6 million, representing a 9.1% return on equity.
• An interim dividend of $0.18 per common share was declared.

Read next: Conduit Holdings announces H1 2022 figures

Outlook

The company reported an estimated ultimate premium of US$1.9 billion written since its launch in December 2020 until June 30, 2023, with a substantial pipeline of unearned premium (approximately US$755 million) set to flow through in subsequent years.

The current market conditions remain favourable, with property and specialty lines leading the way, Conduit said.

The company said it was well-positioned for continued growth in the hard market, with an experienced team, an efficient and scalable underwriting business model, and a legacy-free balance sheet with ample capacity. It holds an AM Best A- (Excellent) rating, demonstrating "very strong" balance sheet strength.

Underwriting update

Conduit Re experienced growth across all segments during the first half of 2023, driven by new business, high retention, and underlying growth of renewal business. Rates showed improvement during this period, and the company's strategy resulted in increased client count and submission flow. The renewing portfolio served as a key foundation for profitability.

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