Conduit Re Reports Significant Growth in 2024
Bermuda-based Conduit Re has announced an impressive performance for the year 2024, achieving gross premiums written (GPW) of $1.16 billion. This marks a remarkable increase of nearly 25% compared to the previous year, underscoring the reinsurer’s resilience and strategic growth initiatives despite a backdrop of heightened catastrophe events. The company also reported a healthy return on equity (ROE) of 12.7% for the year.
The reinsurer attributes its success to “deliberate and targeted” growth across its three core business segments, which have been propelled by lucrative underwriting opportunities in its selected classes. In the property segment, Conduit Re experienced a significant 29.5% increase in GPW, reaching $606.3 million. The specialty portfolio surged by 38.7% to $258.5 million, while the casualty segment saw a modest increase of 7.6%, totaling $297.6 million.
In terms of pricing dynamics, the company reported that overall levels and terms remained favorable in 2024, reflecting a modest 1% risk-adjusted rate increase, net of claims inflation. By segment, the property sector experienced a 3% risk-adjusted rate change, specialty saw a 1% increase, and casualty faced a 1% decrease.
Conduit Re’s reinsurance revenue climbed 28.5% to $813.7 million in 2024, while net reinsurance revenue rose by 29.4% to $720 million. However, the reinsurer’s reinsurance service result fell by 28.3% to $131.6 million, attributed to rising net reinsurance service expenses, which increased to $588.4 million from $372.7 million in 2023. This increase was driven by a rise in losses and loss-related amounts, which surged to $530.9 million in 2024 from $328 million the previous year, reflecting higher losses across all three business segments.
Notably, 2024 marked another year of above-average loss activity for the re/insurance sector. Conduit Re recorded an undiscounted net loss of $68 million related to Hurricanes Helene and Milton, with these events contributing 9.4% to the undiscounted loss ratio of 84.4%, compared to 68% in 2023. The discounted net loss ratio also rose to 73.3% in 2024 from 58.2%, driven by increased net losses tied to natural catastrophes and large risk events.
In light of the elevated loss ratio, partially mitigated by a lower reinsurance operating expense ratio of 8.4% and an other operating expense ratio of 4.3%, Conduit Re’s discounted combined ratio increased to 86% in 2024, up from 72.1% in 2023. The undiscounted combined ratio also saw a rise to 97.1% from 81.9%.
On the asset side of the balance sheet, the reinsurer reported a total net investment return of 4% in 2024, down from 5.8% in 2023. This decline was attributed to net investment income, driven by a generally higher-yielding portfolio. Net investment income, excluding realized and unrealized gains and losses, was $65 million for 2024, reflecting a 57.4% year-on-year increase. The total investment return, including net investment income, net realized gains and losses, and net change in unrealized gains and losses, amounted to a gain of $66.1 million for the year.
Looking forward, Conduit Re anticipates robust growth during the January 1st, 2025, reinsurance renewals, with positive momentum across each business segment and a renewed retrocession program at enhanced terms. At the January 1, 2025, renewals, the reinsurer observed a risk-adjusted rate change, net of claims inflation, of -3%, while emphasizing that pricing and, crucially, underwriting terms and conditions remain highly attractive.
Regarding the California wildfires, Conduit Re has provided a preliminary undiscounted ultimate loss estimate across all divisions, ranging from $100 million to $140 million, net of reinsurance recoveries and reinstatement premiums. The reinsurer expects these wildfires to bolster favorable underwriting conditions during upcoming renewals and anticipates opportunities to expand and deploy capacity at favorable rates.
Trevor Carvey, Chief Executive Officer, remarked: “From a standing start four years ago, we have successfully built a business that generated $1.16 billion in gross premiums written in 2024, reflecting a 24.8% increase from 2023. In a year marked by significant catastrophe losses, we achieved a 12.7% ROE, following a 22.0% ROE in 2023.”
He continued, “While we continue to experience substantial growth, we have established a proven platform that delivers profitable returns, even amid high industry loss years. Our results highlight the ongoing and increasing cost efficiency of our business model, alongside a growing contribution from investment returns as our asset base expands. The Company is well-capitalized, and we aim to build upon these achievements as we continue to grow and mature.”
Neil Eckert, Executive Chairman, stated: “At our IPO four years ago, we set out with a goal of achieving mid-teens ROEs and gross premiums written of $0.9 billion in our fourth year. Our premium in 2024 reached $1.16 billion, exceeding our IPO target by 30%, and we achieved a 12.7% ROE in a year marked by high industry losses, following a 22.0% ROE in 2023. We take pride in what this business has accomplished, and with a robust capital base and an efficient platform still in its growth phase, I am genuinely excited about our future prospects.”
Source: Reinsurance News
