CHL is today presenting its trading statement for the three months ended 31 March 2021.
Key highlights:
- Successful initial quarter of trading with strong broker and client support;
- Estimated ultimate premiums written of $199.1 million versus approximately $160.0 million announced in our 14 January 2021 trading statement;
- Gross premiums written of $82.6 million;
- Estimated loss from Winter Storm Uri is minimal with a net incurred loss of $6.0 million, including the impact of reinstatement premiums;
- Industry-leading investment managers appointed to manage our invested assets;
- Continued build-out of underwriting portfolio and development of teams and technology.
Neil Eckert, Group Executive Chairman, commented:
“There appears to be rating discipline in primary markets that is not necessarily born out of capital constraints, but from the results the market has experienced over the last few years and the perceived need for fundamental improvement in pricing. We expect to see this trend continuing. We are well positioned, with our legacy-free balance sheet, to take advantage of these attractive market conditions.”
Trevor Carvey, Group Chief Executive Officer, commented:
“We continue to make good progress and remain on track across all operational areas of the Group. Our underwriting teams moved straight on from 1 January business and have continued to enjoy outstanding support and approval from both brokers and customers alike. The dual forces of rate and market sentiment are still pushing strongly in our classes, which further strengthens our opinion – expressed at the time of the IPO – that the rising tide would be lifting many boats across the industry.”
Underwriting activities:
Given the start-up nature of the business and the higher proportion of quota share business in our book, we are presenting both estimated ultimate and gross premiums written:
| Segment | Estimated ultimate premiums written $m | Percentage of total | Gross premiums written $m | Percentage of total |
| Property | 85.7 | 43% | 44.2 | 54% |
| Casualty | 60.6 | 30% | 15.9 | 19% |
| Specialty | 52.8 | 27% | 22.5 | 27% |
| Total | 199.1 | 82.6 |
In Q1, Conduit Re bound contracts with total expected ultimate premiums written of $199.1 million, marginally ahead of the business plan presented in our IPO Prospectus. While we wrote more than plan, we also wrote a higher proportion of quota share business than plan and therefore there will be a lag in the accounting recognition of gross written and earned premiums.
Pricing
Q1 2021 saw further momentum in both pricing and terms and conditions in most markets we are targeting, particularly at the primary level. We have initiated our own renewal year on year pricing change measures which we intend to publish on a quarterly basis. For Q1 2021 these were: Property +12%; Casualty +14%; Specialty +8%.
Claims
Our exposure to the Winter Storm Uri event is relatively small and the financial impact would not typically be considered material to Conduit Re. Our net aggregate loss recorded in relation to Winter Storm Uri, including the impact of reinstatement premiums, is estimated to be $6.0 million. However, with a lack of reported claims to date, there is a degree of uncertainty around an early loss estimate such as this. We will continue to keep the estimate under review as more detailed information becomes available.
Investments
During Q1 2021, we have appointed three industry leading third party investment managers to manage our invested assets. Funding of the portfolios commenced in April and, as a result, we have avoided much of the market volatility that occurred in the quarter. We expect full deployment of our funds by 30 June 2021. Our investment guidelines are in line with the strategy communicated in our IPO Prospectus, which is to pursue a low risk approach with a view to protecting our solvency capital.
Operations
The development of Conduit Re’s technology platform and recruitment of the wider Conduit Re team is ongoing and in line with our plan and expectations.
Outlook
Conduit Re has had a successful first trading quarter and we have laid the foundations that we set out in our IPO Prospectus. The market continues to develop very much in line with our expectations and we remain confident that we will deliver on our plan.
Conference Call & Presentation
As announced on 6 May 2021, CHL will be hosting an analyst and investor conference call at 12:00 noon UK time / 8:00 am Bermuda time on Thursday 13 May 2021.
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 13 May 2021, through midnight BST on 13 June 2021.