Conduit Re’s retro lowers hurricane PML further at July 1st, with increased limit and aggregate cover

Conduit Re appears to have made further enhancements to its retrocession program around the mid-year as its North Atlantic hurricane probable maximum loss fell further and the company disclosed increased core retro limit, aggregate cover and protection against second and third events.

Since early 2025 losses from the California wildfires, Conduit Re has been building-out its retrocessional reinsurance protection against major catastrophes and secondary peril events.

Following the impacts of the Los Angeles wildfires in early 2025, Conduit Re explained that it planned to buy more retrocession to protect its earnings from volatility due to secondary peril loss impacts.

The reinsurer made good on that, purchasing catastrophe hedging for US and global secondary perils, as well as more aggregate retrocession that year.

This was seen as an evolution of the retro strategy, to complement the peak peril protection the reinsurer already had in place.

That evolution continued into 2026, with Conduit Re securing enhanced protection for both peak and secondary perils at the January renewals this year.

It now appears the reinsurance company has further bolstered its retrocession around the mid-year 2026 renewal season, resulting in a further lowering of its PML exposure to North Atlantic hurricane risk.

In announcing its first-half results this morning, Neil Eckert, Chief Executive Officer, said, “These results represent a solid first half, demonstrating the considerable progress we have made in advancing the business. In the period, we have continued to rebalance our property portfolio towards excess of loss business, added depth to our team with new hires across key functions, including a COO and senior additions to our property team to join later this year. We have also put in place an enhanced retrocession programme that is designed to reduce underwriting volatility and provide strong earnings and balance sheet protection. While the market is softening, we feel it is right to place emphasis on margin and capital discipline as opposed to growth.”

The focus has been on reducing net exposure to both peak catastrophe and secondary peril loss events, with Conduit Re buying increased core retro limit this year and aggregate coverage as well.

For North Atlantic windstorms, the retrocession buying first reduced the 100 year PML to 10% as a percentage of TNAV at January 1st (down from 14% at Jan 1st 2025), but has now reduced that metric further to 8% after July 1st.

On a 250 year PML basis, the percentage of TNAV figure fell from 19% at the start of 2025, to 17% at January 1st 2026 and now has fallen further again to 13% as of July 1st 2026.

Conduit Re has also slightly reduced its exposure to a 100-year European windstorm event and to 250-year US and Canadian earthquakes through its retro purchases.

First-half 2026 results have been impacted slightly by the increased retrocession spend, as you’d imagine.

As well as both more core catastrophe retrocession limit having been purchased and aggregate retro, Conduit Re also disclosed today that it now has protection against second and third events.

It’s not clear exactly when the subsequent event protection was added, but the reductions in PML’s at July 1st suggest more retrocession buying at the mid-year by the reinsurance company.

Conduit Re stated this morning that, “The market outlook suggests that price softening and increased competition is likely to continue in most lines of business, highlighting the importance of active cycle management.”

Adding, “We remain focused on risk selection, portfolio optimisation and managing our underwriting volatility through an effective retrocession programme.”

Commenting on the continued softening of the global reinsurance market, Conduit Re explained that, “Risk-adjusted rates declined 6% across our portfolio during H1 2026; some expansion in terms and conditions observed.”

While, “Industry capital levels continue to increase as relatively benign global catastrophe losses have supported strong returns.”

The company added that it will “continue to manage growth and capital deployment for these competitive conditions,” one aspect of which is evident in a continued reduction of quota shares that it sees as lower margin, while writing more excess of loss business. In fact, 40% of Conduit Re’s property underwriting is expected to be on an excess of loss basis in 2026.

Recall that Conduit Re did not renew its $100 million US named storm and earthquake focused Stabilitas Re Ltd. (Series 2023-1) catastrophe bond, which matured this June.

However, we imagine that with its retrocession buying continuing to increase as it grows, there’s a good chance we see Conduit Re back in the cat bond market at some stage in its future.