Conduit Re posts strong growth and underwriting performance amid elevated cat activity in 2024

Bermuda-based Conduit Re generated gross premiums written (GPW) of $1.16 billion in 2024, an increase of almost 25% year-on-year, as the company reports a return on equity (ROE) of 12.7% for the year despite the elevated catastrophe experience.

The reinsurer states that it achieved “deliberate and targeted” growth across its three business segments, driven by attractive underwriting opportunities in target classes.

In property, Conduit Re grew GPW 29.5% to $606.3 million in 2024, while the specialty portfolio expanded by 38.7% to $258.5 million, and casualty GPW increased 7.6% to $297.6 million.

In terms of pricing, the company says that levels and terms and conditions remained attractive in 2024 with a modest, overall, 1% risk-adjusted rate increase, net of claims inflation. By segment, property saw a 3% risk-adjusted rate change, specialty a 1% increase, and casualty a 1% decrease.

Reinsurance revenue rose 28.5% to $813.7 million in 2024 and net reinsurance revenue jumped 29.4% to $720 million.

The reinsurance service result fell by 28.3% to $131.6 million, as net reinsurance service expenses increased to $588.4 million from $372.7 million in 2023, driven by a rise in losses and loss related amounts to $530.9 million in 2024 from $328 million a year earlier, with higher losses in all three business segments.

Conduit Re highlights that 2024 was yet another above average year of loss activity for the re/insurance sector. The reinsurer recorded an undiscounted net loss, after reinsurance and reinstatement premiums, of $68 million related to Hurricanes Helene and Milton, with the two events contributing 9.4% to the undiscounted loss ratio for the year of 84.4% compared with 68% in 2023. The discounted net loss ratio increased to 73.3% in 2024 from 58.2%, driven by an increase in net losses related to natural catastrophes and large risk events.

In light of the higher loss ratio, partially offset by a lower reinsurance operating expense ratio of 8.4% and other operating expense ratio of 4.3%, Conduit Re’s discounted combined ratio increased to 86% in 2024 from 72.1% in 2023, and the undiscounted combined ratio increased to 97.1% from 81.9%.

On the asset side of the balance sheet, the reinsurer has reported a total net investment return of 4% in 2024 compared with 5.8% in 2023, driven by net investment income given a generally higher yielding portfolio. Net investment income, excluding realised and unrealised gains and losses, was $65 million for 2024, up 57.4% year-on-year as a result of a higher yielding portfolio and growth in cash and investment balances. Total investment return, so including net investment income, net realised gains and losses, and net change in unrealised gains and losses, was a gain of $66.1 million for 2024.

Looking ahead, Conduit Re highlights strong growth at the January 1st, 2025, reinsurance renewals, with growth in each business segment, and a renewed retrocession programme at improved terms.

At 1.1 2025, the reinsurer saw a risk-adjusted rate change, net of claims inflation, of -3%, but notes that pricing and, importantly, underwriting terms and conditions remain at very attractive levels.

On the California wildfires, Conduit Re has reported a preliminary undiscounted ultimate loss estimate across all divisions of between $100 and $140 million, net of reinsurance recoveries and reinstatement premiums. The reinsurer expects the wildfires to support favourable underwriting conditions during upcoming renewals and expects to see opportunities to grow and deploy capacity at favourable rates.

Trevor Carvey, Chief Executive Officer, commented: “From a standing start four years ago, we have delivered a business which produced $1.16 billion of gross premiums written in 2024, an increase of 24.8% on 2023. In a high catastrophe year, the business produced a 12.7% ROE, after having delivered a 22.0% ROE in 2023.

“While the business is still exhibiting substantial growth, we now have a demonstrated platform, generating profitable returns even in high industry loss years. Our results also illustrate the continued and growing cost efficiency of our business model and an increasing contribution to profitability from investment returns as our asset base grows. The Company is well capitalised and we expect to continue to build on these achievements as the business grows and matures. We had a solid January 2025 renewal period with extensive support from our existing clients across our multi-line profile. Selective additions of attractive business led to double digit growth over the 2024 renewal season on an ultimate basis.

“The California wildfires are a tragic event for the families and communities impacted, as well as a significant loss for the industry, from which Conduit is not immune. From an industry perspective, we expect that the wildfires will impact rates in areas of the property portfolio which will flow through to an improved underwriting environment and provide continued opportunities for the Company. While it is only February and we have experienced a very significant event early in the year, our current forecast leads us to believe we can still deliver an ROE in the low to mid teens for the year, assuming reasonable loss activity and investment performance.”

Neil Eckert, Executive Chairman, said: “On our IPO four years ago we set out with a target of delivering mid-teens ROEs and gross premiums written of $0.9 billion in year four. Our premium in 2024 was $1.16 billion which is 30% above our IPO target, in addition we achieved a 12.7% ROE in a high industry loss year following on from a 22.0% ROE in 2023. We can be proud of what this business has achieved and, with a strong capital base and a robust, efficient platform that is still in its growth phase, I am very excited for the future.”

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