TIDMCRE
RNS Number : 7551N
Conduit Holdings Limited
25 January 2023
Conduit Holdings Limited
("CHL" - LSE ticker: CRE)
January 2023 Renewals Trading Update
Significant premium growth through new business and renewals,
with year-on-year change of circa 60%; higher pricing and improved
terms and conditions secured; entering 2023 from a position of
strength and well placed to continue to take advantage of further
anticipated momentum in rates
CHL, the parent company of Conduit Re, a pure-play global
reinsurance business based in Bermuda, today provides a trading
update in relation to the key 1 January 2023 renewal season where
it has seen a strong start to the year.
Trevor Carvey, Chief Executive Officer, said:
"This has been an exceptional renewal season. 60% premium growth
is the true indication of the underwriting conditions we have
experienced. This is manifesting itself across pricing and rates,
terms and deductibles, and the strong increase in new business that
we have enjoyed. From a capital perspective, we have plenty of room
to execute our plan and the growth we anticipate."
Key highlights of 1 January renewals:
-- Estimated ultimate premiums written of $421.4 million:
-- Increase of circa 60% on 2022 ($262.6 million)
-- Extremely strong Property and Specialty market conditions
provided the opportunity to grow those classes more
-- Continued selective growth in Casualty lines which continue
to provide attractive underwriting opportunities
-- Business continues to trend towards a mid-80's combined ratio
in the medium term, further supported by:
-- Significantly enhanced terms and conditions
-- Reduced acquisition costs on renewed business
-- Exceptional pricing environment
-- 19% risk-adjusted rate change net of inflation across the portfolio, comprising:
-- 39% risk-adjusted rate change on Property
-- 1% risk-adjusted rate change on Casualty
-- 14% risk-adjusted rate change on Specialty
-- Conduit Re continues to have a strong, legacy-free balance
sheet and is well placed to continue to grow in the current market
conditions
Underwriting activities
The split of our estimated ultimate premiums written by line of
business at 1 January 2023 was:
Type of business 2023 % 2022 % Year on Year increase %
$m $m
Property 197.3 47 109.3 41 81
------ ---- ------ ---- ------------------------
Casualty 112.2 27 85.5 33 31
------ ---- ------ ---- ------------------------
Specialty 111.9 26 67.8 26 65
------ ---- ------ ---- ------------------------
Total 421.4 100 262.6 100 60
------ ---- ------ ---- ------------------------
Pricing
Conduit Re's year-on-year renewal business written at 1 January
2023 shows a further hardening of pricing, with an overall
risk-adjusted rate change, net of inflation, of 19%:
Type of business 2023 January Q3 2022 to-date H1 2022 to-date Q1 2022 to-date 2022 January
Renewals Renewals
Property 39% 7% 8% 8% 8%
--------------------- ---------------- ---------------- ---------------- ---------------------
Casualty 1% 1% 1% 3% 4%
--------------------- ---------------- ---------------- ---------------- ---------------------
Specialty 14% 2% 2% 2% 2%
--------------------- ---------------- ---------------- ---------------- ---------------------
Weighted 19% 4% 4% 5% 5%
--------------------- ---------------- ---------------- ---------------- ---------------------
These net rate changes reflect management's assessment of rate
changes of our renewal business net of the impact of claims
inflation, exposure changes and changes in any other terms and
conditions.
Gregory Roberts, Chief Underwriting Officer, commented:
"We experienced a busy and rewarding start to the year. In the 1
January renewals we increased our weighting towards Property and
Specialty business, capitalising on an exceptional shift in
pricing, while balancing it against our Casualty book, which is
still attractively priced. A highlight was that we successfully
secured our retrocession programme in line with our objectives. As
a team, we are absolutely delighted in the way that we executed the
renewals period and feel that we have developed a reputation as
being a responsive, reliable and disciplined counterparty. We
expect market conditions to continue to offer opportunities for
further growth as the year develops."
Outlook
The significant movement in pricing and terms and conditions is
evidence of a structural shift in the market-place caused by a
fundamental re-pricing of risk and an imbalance in the supply and
demand of capital. We see this as an enduring environment creating
the opportunity for improved margins in our business across the
rest of 2023 and beyond.
We will announce our 2022 year-end financial results on 22
February 2023.
Neil Eckert, Executive Chairman, commented:
"This has been an exciting January renewals. Premium up,
conditions improving, and our team has had a really good start to
2023. We are continuing to see reserve strengthening across the
reinsurance industry, which gives Conduit Re with its legacy-free
balance sheet, competitive edge. Conduit Re is now truly through
its start-up phase."
Webcast
Conduit Re's management will host a live question-and-answer
session via a webcast and conference call for analysts and
investors on Wednesday, 25 January 2023 at 12pm (midday) UK time /
8am Bermuda time.
To access the live webcast, please register in advance here:
https://www.lsegissuerservices.com/spark/ConduitHoldingsLtd/events/47793d01-4b7b-45a6-bac1-926965246116
To access the live conference call, please register to receive
unique dial-in details here:
https://cossprereg.btci.com/prereg/key.process?key=P9RCY7WUY
A recording of the conference call will be made available on the
Investors section of Conduit Re's website at
www.conduitreinsurance.com from approximately 4:00 p.m. BST on 25
January 2023.
Media contacts
H/Advisors Maitland - Vikki Kosmalska / Alistair de
Kare-Silver
+44 (0) 207 379 5151
conduitre@h-advisors.global
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.
Conduit Holdings Limited is the ultimate parent of Conduit Re
and is listed on the London Stock Exchange (ticker: CRE).
Learn more about Conduit Re:
Website: https://conduitreinsurance.com/
LinkedIn: https://www.linkedin.com/company/conduit-re
Important Information
References below to Conduit Re include Conduit Holdings Limited
and Conduit Reinsurance Limited.
This announcement includes 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",
"goals", "objective", "rewards", "expectations", "projects",
"anticipates", "expects", "achieve", "intends", "tends", "on
track", "well placed", "estimated", "projected", "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,
pricing rate changes, terms and conditions, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, claims development, losses and loss estimates and future
business prospects; and (ii) business and management strategies and
the expansion and growth of Conduit Re's operations.
Forward-looking statements may and often do differ materially
from actual results. Forward-looking statements reflect Conduit
Re'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 Re's business, results of
operations, financial position, liquidity, prospects, growth and
strategies. These risks, uncertainties and assumptions include, but
are not limited to: the possibility of greater frequency or
severity of claims and loss activity than Conduit Re's
underwriting, reserving or investment practices have anticipated;
the reliability of catastrophe pricing, accumulation and estimated
loss models; the actual development of losses and expenses
impacting estimates for claims which arose as a result of recent
loss activity such as the Ukraine crisis, Hurricanes Ian and Ida,
and the European storms and floods in 2021; the impact of complex
causation and coverage issues associated with attribution of losses
to wind or flood damage; unusual loss frequency or losses that are
not modelled; the effectiveness of Conduit Re's risk management and
loss limitation methods, including to manage volatility; the
recovery of losses and reinstatement premiums from Conduit Re's own
reinsurance providers; the development of Conduit Re's technology
platforms; a decline in Conduit
Reinsurance Limited's ratings with A.M. Best or other rating
agencies; the impact that Conduit Re's future operating results,
capital position and ratings may have on the execution of Conduit
Re's business plan, capital management initiatives or dividends;
Conduit Re's ability to implement successfully its business plan
and strategy during 'soft' as well as 'hard' markets; the premium
rates which are available at the time of renewals within Conduit
Re's targeted business lines; increased competition on the basis of
pricing, capacity or coverage terms and the related demand and
supply dynamics as contracts come up for renewal; the successful
recruitment, retention and motivation of Conduit Re's key
management and the potential loss of key personnel; the credit
environment for issuers of fixed maturity investments in Conduit
Re's portfolio; the impact of swings in market interest rates,
currency exchange rates and securities prices; changes by central
banks regarding the level of interest rates and the timing and
extent of any such changes; the impact of inflation or deflation in
relevant economies in which Conduit Re operates; Conduit Re
becoming subject to income taxes in the United States or in the
United Kingdom; and changes in insurance or tax laws or regulations
in jurisdictions where Conduit Re conducts business.
Forward-looking statements contained in this trading update may be
impacted by the escalation or expansion of the Ukraine conflict on
Conduit Re's clients, the volatility in global financial markets
and governmental, regulatory and judicial actions, including
coverage issues.
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
Re 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.
The Conduit Re renewal year on year risk-adjusted 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.
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END
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