AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Bermudian-based Conduit Reinsurance Limited.

The outlook of these credit ratings is stable.

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 underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio.

BCAR scores are expected to remain comfortably in excess of the strongest threshold as the company executes its business plans and grows its reinsurance portfolio.

The company has good capital quality without any debt leverage, a conservative investment strategy focused on debt securities and a reinsurance programme of excellent credit quality, the agency said.

Conduit Re has been impacted by several catastrophe and large loss events during its first two years of operations, with marginal underwriting results reported in 2021, and expected by AM Best for 2022.

Over the coming years, the company expects to achieve combined ratios below 90 per cent, supported by favourable market conditions and lower expense ratios as its operations reach appropriate scale.

AM Best said Conduit Re wrote gross written premium of $379 million in 2021, its first full year of operation. Significant growth was achieved in 2022, with GWP reaching $528 million for the first nine months of the year.

Management has demonstrated its ability to adapt to market conditions, shaping its portfolio to optimise performance and exposure, writing a greater share of proportional business than originally planned.