AM Best Affirms Credit Ratings Of Conduit Re

December 10, 2021 | 0 Comments

AM Best has affirmed the Financial Strength Rating of A- [Excellent] and the Long-Term Issuer Credit Rating of “a-” [Excellent] of Conduit Reinsurance Limited. The outlook of these Credit Ratings is stable.

A statement from the ratings agency said, “The ratings reflect Conduit Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

“Conduit Re’s balance sheet strength is supported by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio [BCAR], which the company is expected to maintain over its five-year start-up phase. Levels of risk-adjusted capitalisation take into account AM Best’s additional capital requirements for new company formations. Conduit Re holds a high level of excess capital relative to the scale of its underwriting operations, following a USD 1.1 billion initial public offering of its holding company, Conduit Holdings Limited, in December 2020.

“In the first three quarters of 2021, Conduit Re’s profitability has been impacted by catastrophe losses and elevated expenses as the company achieves scale. Gross premiums written during this period reached USD 291.2 million. The adequate operating performance assessment reflects AM Best’s expectations that over the five-year start-up period, Conduit Re will be able to achieve internal capital generation assisted by the company’s well-defined business plans, and a favourable pricing environment.

“Conduit Re has established relationships with brokers effectively and is on track to achieve its target premium volumes, albeit with a greater share of proportional treaty business than expected as a result of market conditions. The company’s reinsurance portfolio already benefits from good diversification of business by line of business and geography. In AM Best’s view, Conduit Re’s will require time to demonstrate and secure its competitive position in the international reinsurance market.“

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