Last checked at 19 Jan 2022 07:00
Conduit Holdings Limited January 2022 Trading Update
Conduit Holdings Limited ("CHL" or "Conduit") (Ticker: CRE)
Pembroke, Bermuda - 19 January 2022
Trading Update regarding 1 January 2022 renewals
CHL is today providing a trading update regarding business written in the important 1 January 2022 renewal season.
Key highlights:
The highlights of the 1 January 2022 renewal season for Conduit's main operating subsidiary Conduit Reinsurance Limited ("Conduit Re") are as follows:
• Estimated ultimate premiums bound of approximately $262.6 million (2021: $154.4 million), an annual increase of approximately 70%.
• Overall portfolio year on year renewal net rate change of +5%; reflecting favourable improvement in both pricing and terms & conditions, in line with management expectations. Positive momentum expected to continue in 2022.
• Maintaining a hit rate of approximately 20% reflecting our strong submission flow and our disciplined and selective approach.
• Continued focus on attractive primary market business via Quota Share business (64%) with an increase also seen in Excess of Loss business (36%) with measured improvements in attachments and terms.
• Balanced portfolio diversified across Property (41%), Casualty (33%) and Specialty classes (26%) in line with management expectations.
• Conduit Re's 1 January outwards reinsurance programme successfully placed in line with management expectations, with some further planned purchases expected to be made during the year as our exposures build.
• Strengthening the Conduit Re brand in the reinsurance market, building further on established trading relationships with all leading reinsurance broking intermediaries and demonstrating strong client renewals and acceptance on new business.
Neil Eckert, Group Executive Chairman, commented:
"Conduit Re is benefiting from some of the most attractive market conditions seen in a generation. Our second successful January renewals season reflected the fact that 2021 was the fourth costliest catastrophe year in history for the reinsurance industry and total catastrophe losses for the insurance market over the last five years now amount to over $500 billion. As a new market entrant with a strong capital base, an unencumbered balance sheet and a forward-looking approach to underwriting, we are well positioned to benefit from continued favourable market conditions."
Trevor Carvey, Group Chief Executive Officer, commented:
"In a very late renewal season characterised by a tough stand-off between brokers and underwriters, we saw continuing rate improvements and tightening of terms and conditions across our core classes. This has allowed us to take another big step forward in achieving our long-term goal of building a market-leading reinsurance underwriting franchise."
Underwriting activities
Conduit Re underwrote approximately $262.6 million of estimated ultimate premiums bound on the important 1 January 2022 renewal date (2021: $154.4 million), an annual increase of approximately 70%. We maintained a hit rate of approximately 20%. The business written at 1 January was approximately 64% Quota Share business and approximately 36% Excess of Loss business.
The split of our estimated ultimate premiums written by class of business was:
Type of business | 2022 $m | % | 2021 $m | % | Year on Year increase % |
Property | 109.3 | 41 | 79.7 | 52 | +37 |
Casualty | 85.5 | 33 | 24.7 | 16 | +246 |
Specialty | 67.8 | 26 | 50.0 | 32 | +36 |
Total | 262.6 | 100 | 154.4 (1) | 100 | +70 |
(1) The 1 January 2021 estimated ultimate premiums bound figure of $160.1 million has been adjusted to $154.4 million to reflect management discounts applied plus adjustments for final signed lines.
Pricing
Both pricing and terms and conditions improved in most of our core markets. Conduit's overall year on year renewal net rate changes for business written at 1 January 2022 were estimated to be:
Type of business | 2022 Year on Year change |
Property | 8% |
Casualty | 4% |
Specialty | 2% |
Total weighted | +5% |
As Conduit Re is now in a position to compare the pricing and terms and conditions of our renewal business to previous years, we have provided rate change information on a "net" basis. These net rate changes reflect management's assessment of rate changes net of the impact of claims inflation, exposure changes and changes in any other terms and conditions.
Outlook
We anticipate the momentum of the 1 January 2022 renewals to continue into the other key renewal dates throughout the year which will further support Conduit Re in delivering on its objective of building a high quality reinsurance underwriting franchise.
We expect to announce our 2021 year-end financial results on 24 February 2022.
Conference call & presentation
Conduit management will host a live analyst and investor videoconference, including a question-and-answer session, on Wednesday, 19 January 2022 at 12pm (midday) UK time / 8am Bermuda time.
The video conference will be available at:
https://conduitreinsurance.zoom.us/j/86758308003?pwd=YWNHV1cwUldtTmNuMVN0Tm8yeWtwdz09
Meeting ID: 867 5830 8003
Passcode: 750225
One tap mobile
8335480282,,86758308003#,,,,*750225# US Toll-free
8778535257,,86758308003#,,,,*750225# US Toll-free
Dial by your location
833 548 0282 US Toll-free
877 853 5257 US Toll-free
888 475 4499 US Toll-free
833 548 0276 US Toll-free
0 800 260 5801 United Kingdom Toll-free
0 800 358 2817 United Kingdom Toll-free
0 800 456 1369 United Kingdom Toll-free
0 800 031 5717 United Kingdom Toll-free
866 237 6875 Bermuda Toll-free
Meeting ID: 867 5830 8003
Passcode: 750225
Find your local number: https://conduitreinsurance.zoom.us/u/koApAYYeE
An archive of the conference call will be available together with the presentation slides through the Investors section of CHL's website at www.conduitreinsurance.com from approximately 4:00 p.m. BST on 19 January 2022.
-END-
Media contacts
Haggie Partners - David Haggie, Caroline Klein
+44 (0) 207 562 4444
conduitre@haggie.co.uk
Investor relations and other enquiries:
info@conduitreinsurance.com
About Conduit Re
Conduit Re is a pure play global reinsurance business based in Bermuda. 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.
Learn more about Conduit Re:
Website: https://conduitreinsurance.com/
LinkedIn: https://www.linkedin.com/company/conduit-re
Twitter: https://twitter.com/Conduit_Re
Important Information
This announcement may include 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", "projects", "anticipates", "expects", "intends", "estimates", "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, future events or intentions. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future 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. Any 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. 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. These forward-looking statements speak only as at the date of this announcement. 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.
"Estimated ultimate premiums bound" is the estimated total gross premiums written that is expected to be earned assuming all bound contracts run to the end of the period of cover.
"Hit rate" is the percentage contracts written as a proportion of the submissions received.
The Conduit Re renewal year on year pricing change measure is an internal methodology that management intends to use to track trends in premium rates of a portfolio of reinsurance contracts. The change measure 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. The calculation involves a degree of judgement in relation to comparability of contracts and the assessment noted above, particularly in Conduit Re'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 Re contracts. The future profitability of the portfolio of contracts within the change measure is dependent upon many factors besides the trends in premium rates.