Convex secures A rating in S&P upgrade

By Ryan Hewlett

June 26 - (The Insurer) - S&P Global Ratings has upgraded the financial strength ratings of Convex's operating subsidiaries to A from A-minus.

The upgrade covers Bermuda-based Convex Re Limited, Convex Insurance UK Limited, Luxembourg-based Convex Europe SA and Convex Guernsey Limited.

The ratings for the group's operating subsidiaries have been assigned a stable outlook.

S&P Global Ratings said on Thursday that the upgrade reflects the “significant scale” Convex has built since its launch in 2019, alongside the underwriting profitability goals achieved in the past two years.

Convex in April reported gross written premiums of $5.16 billion for 2024, an increase of 22% year on year, and confirmed its entry into the Lloyd's market through the launch of Syndicate 1984, with S&P Global Ratings forecasting continued growth in the near-term.

Syndicate 1984 has an initial target of 150 million pounds ($206 million) of premium in 2025 and is backed by Names capital.

“We expect Convex's portfolio to remain balanced between property, casualty, and specialty business. We estimate its market share of its chosen fields to be around 3%,” it said.

S&P Global Ratings also noted that Convex has grown its market presence. The rating agency said Convex leads on around a third of its direct book. Its reinsurance utilisation reduced to around 32% at year-end 2024 and is expected to gradually reduce to around 30% in the next few years.

“As a result, we have changed our competitive position assessment to strong from satisfactory because Convex has coupled its growth with strong technical profitability,” it said.

S&P Global Ratings said Convex has demonstrated “sound underwriting” as shown through its underwriting results since its inception in 2019, with an 87% combined ratio in 2024 marking the group's third consecutive sub-100% full-year combined ratio.

For 2026 and 2027, S&P Global Ratings assumes a combined ratio of 90% to 92% if major losses remain within the annual budget. It also expects $300 million to $400 million of net income for 2025, $500 million to $700 million for 2026 and 2027, with a return on equity of 11% to 16%.

“The stable outlook reflects our expectation that Convex will maintain its strong competitive position with sound underwriting and bottom-line profitability in line with our base case. We also anticipate capitalisation with a material buffer over our highest confidence interval according to our capital model,” it said.

Convex was launched in September 2019 by Stephen Catlin, its current executive chair, and Paul Brand, its CEO, with $1.8 billion of committed capital from backers including Onex Partners and PSP Investments.