Reinsurance hard market to stay for medium term or longer: Conduit’s Eckert

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The current favourable market dynamics for reinsurers are likely to endure “for the medium term if not longer”, according to Conduit Re chairman Neil Eckert.

The executive said the current conditions bore many similarities to conditions in the early 2000s, when 9/11, followed by major hurricane activity in 2005, led to a five to six-year run of stellar reinsurance conditions.

“We can’t crystal-ball guess, but it feels to me like there is at least strong conditions for the medium term if not longer,” he said.

Eckert said the market remains “capital constrained” and that this was unlikely to change in the near term.

“There is stress out there,” he said. “That is not going to be cured any time soon.”

The executive was speaking following the publication of the carrier’s 2022 results, which saw Conduit book an underwriting profit of $300,000 and expand its top line by 68.3%. The underwriting dollar profit came despite a negative combined ratio of 107%, with the difference due to 7 points of other operating expenses.

Analysts have hailed the strong position of Conduit to benefit from market conditions as a legacy-free reinsurer.

Investment bank Panmure Gordon said Conduit was “in an ideal position to capture growth, expand margins and achieve scale” in a note following the publication of the results.

CEO Trevor Carvey said underwriting this year would benefit from the “springboard” effect of a large renewal book, following the scale the company has achieved since launching at the end of 2020.

“It is great having a renewal portfolio that becomes your platform or springboard, particularly in a hardening market,” Carvey said.

Despite the hardening in the retro market at 1 January, the executives said the carrier bought a programme matched to its plan with increased limits.“Retrocession to Conduit is not a constraint,” Eckert said.

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Author: Samuel Casey, Insurance Insider

Abid Hussain

Director, Research Analyst, Insurance

Barrie Cornes

Research Analyst, Insurance

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