Conduit Re keeping an eye on cat bonds as a retro option: Carvey

Having successfully expanded its retrocessional reinsurance program at the January 2023 renewals, Bermuda-headquartered reinsurance company Conduit Re is keeping all retro options on the table, with catastrophe bonds one instrument it is keeping an eye on, according to Trevor Carvey, Chief Executive Officer.

Conduit Re had expanded its retrocession panel and purchased expanded retro limits at 1/1, with its inwards book growing significantly in 2022.

Conduit Re reported its first underwriting profit for 2022, although overall it fell to a comprehensive loss of $89.7 million.

The bigger story though, for this still relatively new reinsurer that is building out its portfolio, was the growth achieved, as Conduit Re’s estimated ultimate premiums reached $659.9 million in 2022, up from the $458.5 million written in 2021.

For more on the Conduit Re results see our sister publication Reinsurance News’ article.

In response to a question posed by Artemis during the Conduit Re earnings call today, CEO Trevor Carvey said that cat bonds are a retrocession option that the reinsurer would be open to.

Carvey explained that, from Conduit Re’s perspective, “On catastrophe bonds, we’ve been in and around and involved in that market over the years, we all have experience of it to varying degrees.”

Adding that, “It’s something which we are keeping an eye on.”

He elaborated that, “It’s always useful to be able to have an alternative source of retrocession or capacity.

“It has its place, in time, so it’s something which we’re open to and we’ll keep an eye on it, shall we say. That’s probably the best way of expressing it.”

Historically, newer reinsurance market entrants have tended to look to the catastrophe bond market within their first five years of operation.

So, now in its third underwriting year, it will be interesting to watch Conduit Re and see whether the company could sponsor a cat bond to secure a complementary retro source in the next few years.