AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Conduit Reinsurance Limited (Conduit Re) (Bermuda).

The Credit Ratings (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 has experienced a favourable reception since its launch in December 2020, and in its fourth year of operation (2024) AM Best expects the company to write reinsurance service revenue of approximately USD 800 million (2023: USD 633.0 million). Continued growth has been achieved in the first nine months of 2024, with the company writing gross premiums of USD 957.3 million, which was broadly in line with its business plans. Conduit Re’s management have demonstrated its ability to adapt to market conditions, whilst achieving key objectives. The revision of the outlooks to positive from stable reflects AM Best’s expectation that Conduit Re’s underwriting profile will continue to grow and diversify profitably, albeit at a more modest pace than in the past.

Conduit Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company is expected to manage BCAR comfortably in excess of the strongest threshold as it grows its reinsurance portfolio. Conduit Re’s balance sheet is supported by high quality capital, a conservative investment strategy focused on fixed maturity securities and a reinsurance programme of excellent credit quality.

The adequate operating performance assessment considers enhanced volatility during the company’s start-up phase, along with its results to-date. Conduit Re reported its first year of profit in 2023 (USD: 205.8 million), with results driven by good underwriting and investment returns. Conduit Holdings Limited reported a profit for the first six months of 2024 of USD 98.1 million, compared with USD 78.6 million for the first six months of 2023; however, results for the 2024 year are expected to be moderated by exposure to several catastrophe and large loss events in the second half of the year. Prospectively, AM Best expects Conduit Re to generate solid combined ratios, supported by continued favourable market conditions and lower expense ratios as its revenue grows.

Conduit Re’s risk management framework and internal controls have matured as the company has grown, and risk management capabilities are commensurate with its risk profile.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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