Conduit Re to embed secondary peril retro more structurally in 2026: CEO Eckert

Having purchased aggregate retrocessional reinsurance and secondary peril protection earlier this year after the California wildfires, reinsurer Conduit Re intends to continue evolving its retrocession strategy in 2026, to better protect against these types of events, its CEO Neil Eckert explained this week.

Back in May, it was announced that Conduit Re had purchased catastrophe hedging for US and global secondary perils, as well as additional aggregate retrocession.

At that time, Conduit Re CEO Neil Eckert explained that the retrocession strategy had evolved as a result of those purchases, to complement its existing peak peril protections.

Now, in comments after the firm’s second-quarter earnings this week, Eckert made it clear the Conduit Re retrocession strategy will continue to evolve next year.

Eckert explained during an earnings call, “As discussed last quarter, we have made meaningful changes to our reinsurance programme since the wildfires, and have purchased considerable protection against large secondary perils. Our aim is to reduce volatility going forward from these types of events.

“Looking ahead to 2026, our intention is to embed secondary peril protection more structurally into our core programme, reducing our net exposure to large secondary perils.

“These changes reflect our intent to reduce volatility and manage gross-to-net more effectively as a core part of our underwriting strategy.”

Chief Underwriting Officer Nick Pritchard also referred to the retrocession market during comments about how the mid-year reinsurance renewals had gone.

“As we anticipated, renewal negotiations were more challenging than in 2024. Risk adjusted rates net of inflation declined by approximately 5% through June 30th. Outcomes varied significantly by region, peril and layer. This reflects broader market dynamics, including increased capacity and high ILS participation,” Pritchard explained.

He went on to highlight the role of insurance-linked securities (ILS) during the renewals, saying, “The ILS market continues to show strong appetite, contributing to increased capacity and competitive pricing on certain layers. Our growth rate has moderated, and depending on market conditions, this trend could continue, as we prioritise risk that satisfies our return hurdles.”

Concluding that segment of his statement during the call, “Looking ahead, we remain selective in deploying capital as we make careful adjustments to the portfolio. This also includes a revised outwards reinsurance programme for the remainder of 2025, which will better protect against large sector perils going forward.”

Conduit Re CEO Eckert was later interviewed by our sister publication Reinsurance News, during which he touched on the state of the retro market.

Eckert said, “Retro is quite dependent on what happens during the next three months. The retro market, there was a tough start to the year with LA, so I do think the retro market is more vulnerable to what happens in the rest of this year.”

Adding that, on the evolving retro strategy, at Conduit Re, “What we do want to do is to make sure that we have good coverage in the overall programme. We now have cover for both secondary perils and for the major peak perils, and that will be an ongoing feature of the programme.

“We look forward to renewing our programme.”

Recall that, Conduit Re has its $100 million Stabilitas Re Ltd. (Series 2023-1) catastrophe bond, which provides US named storm and US earthquake peak peril protection.

It will be interesting to see if the reinsurer looks to expand on that, or perhaps tap the cat bond market for aggregate or secondary peril coverage to complement it in future.

As Conduit Re continues to evolve its approach to retrocession, alongside its growth, it is likely insurance-linked securities (ILS) backed sources of capital will play a supporting role.