Conduit Re CEO Trevor Carvey bows out
Conduit Re’s CEO Trevor Carvey (pictured) is set to retire on April 11 due to “a change in personal circumstances requiring his return to the UK”.
The Bermuda-based reinsurer has appointed board chair Neil Eckert as interim CEO while it searches for a successor.
Conduit Re is also taking steps to reduce net secondary peril exposures through retro deals and portfolio adjustments following severe California wildfire losses.
Carvey's departure comes as Conduit Re confirms its outsized losses on California wildfires and said it must now proceed to buy new reinsurance and make “other adjustments” to keep secondary perils from doing further damage.
California wildfires in early January burned off between $100 million and $140 million in ultimate losses, net of reinsurance recovery and reinstatement premiums, Conduit reiterated of a prior estimate.
It’s a runaway unmodeled secondary peril loss. The estimate reaches to a stunning two times the circa $70 million which Conduit Re said was its maximum probable loss against a 1-in-250 year Florida hurricane.
“It is, however, our intention to enter into additional reinsurance purchases to assist in protecting Conduit from further earnings volatility through this current financial year, and specifically as regards secondary perils,” management said of its learnings.
“We believe securing the additional protection in a year with such a significant loss event so early in the year is a prudent measure,” management said.
New layers of protection will come at a cost and Conduit Re can no longer hit its prior forecast for a return on equity in the mid-teens.
“The cost of the additional reinsurance cover, plus other adjustments we intend to make to the portfolio, will reduce our previous guidance of potential forecast RoE for the year to between high single digits and low double digits,” management said.
Mid-teens ROE remains a mid-cycle target, management assured.
More details could be on offer when the firm presents its first-quarter trading statement on May 14.
Analysts at the Berenberg equity brokerage slashed Conduit Re earnings forecast by 27, 20 and 12% for 2025-2027 respectively, but worked to sound upbeat by claiming they liked the trade-off for reduced earnings volatility going forward.
In an interview for Intelligent Insurer ahead of the Baden Baden reinsurance gathering in late 2024, Carvey had hinted at the increased scope of challenges to upstarts in the unmodeled world.
“As more data has become available at lower and more granular levels, the onus is on the reinsurers to access, analyse and build an understanding of what happens from grass roots up,” Carvey said of the end of the era of top-down views from purchased peak peril models.
“It doesn’t cut down on the space for startups, but points towards a type of skillset and commitment that new entrants would need.”
Today, upon resignation, Carvey said: “It has been an honour to lead Conduit Re over the last four years and I am confident that the company is well-positioned for future success.”
Executive chair Neil Eckert praised Carvey’s dedication and contribution. “He led the business through its start-up phase and significant premium growth,” Eckert said.
“We look forward to driving Conduit forward into the next phase of its development.”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
