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.