One year old Conduit Reinsurance Limited will require time to demonstrate and secure its competitive position in the international reinsurance market, according to an AM Best analysis that provided the new reinsurer with excellent ratings.

The agency reported that in the existing favourable pricing environment, the company has a well-defined business plan, a strong balance sheet, adequate operating performance, limited business profile and appropriate enterprise risk management.

It is expected that over the five-year start-up period, Conduit Re will be able to achieve internal capital generation, Best said.

The company review also stated that Conduit Re has established relationships with brokers effectively and is on track to achieve its target premium volumes.

But it will be with a greater share of proportional treaty business than expected, as a result of market conditions.

AM Best said: “The company’s reinsurance portfolio already benefits from good diversification of business by line of business and geography.”

These remarks came as the agency affirmed Conduit Re’s Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Conduit Reinsurance Limited (Conduit Re) (Bermuda).

The outlook of the credit ratings is stable.

Best said: “Conduit Re’s balance sheet strength is supported by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, 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 $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 $291.2 million.”