Retro market capacity could increase, but appetites not expected to change: Conduit Re CUO

Given where the retrocession market is positioned and the fact retro strategies are now less exposed to lower industry-loss level events, we could see more capital coming to support that segment, but Gregory Roberts, CUO of Conduit Re does not expect capital providers risk appetites to change.

Speaking during a media call today, after Bermuda-based reinsurance company Conduit Re reported a 30.3% increase in reinsurance revenue to $588.2 million for the first nine months of 2024, the Chief Underwriting Officer provided some insights into retrocession market conditions.

Gregory Roberts first commented on retro market positioning, which has adjusted in-line with the reset seen across the entire reinsurance market over the last couple of years.

“I think the retro market has positioned itself at an industry-loss level which is very sustainable from their perspective, in the management of expectations from their stakeholders,” Roberts explained.

“That’s across traditional balance sheets, as well as specialist capital from third-party capital, typically the ILS markets and index trades, like the cat bonds,” he said.

Roberts went on to highlight that, after this reset retrocession portfolios and investment strategies have seen improved returns.

The Conduit Re CUO commented, “I think the product’s well demonstrated. It’s clearly, largely well-away from the activity again thus far for this year, though the year is not complete.”

Adding, “So, I expect probably more capacity to be available in that end of the spectrum. But I don’t see a shift in riskiness and risk appetite of that capital.”

Which implies, once again, that attachment levels may prove largely sticky again at the end of year retrocession renewals.

Roberts closed by saying on retrocession that, “Maybe there’s an effect there on pricing, but give or take, I see it as a fairly stable market again.”