Cat bonds benefit as a way to stagger retro renewals: Conduit Re CEO Carvey

There are benefits to sponsoring a catastrophe bond in the way it allows ceding companies to stagger their reinsurance or retrocession renewals across the year, according to Conduit Re CEO Trevor Carvey.

Speaking today during an earnings call, after his reinsurance company Conduit Re announced strong full-year results for 2023 (as reported in our sister publication), Carvey said that sponsoring another catastrophe bond is an option the firm will consider in 2024.

Conduit Re sponsored its debut $100 million catastrophe bond, Stabilitas Re Ltd. (Series 2023-1), in June 2023, then at the January 2024 renewals it secured complementary retrocession that helped it keep its PML’s relatively flat year-on-year.

The cat bond and traditional retrocession are seen as complementary by the company and when asked today about the potential to sponsor another cat bond in 2024, Carvey noted there are benefits beyond just the protection they provide.

First, he explained that sponsoring a catastrophe bond is a lot of work, but with one under its belt in the Stabilitas Re 2023-1 issuance, Conduit Re has already got a platform in place.

Carvey said, “It’s a lot of work to get one of those sponsored and off the starting grid, as it were. So, I guess, we kind of built a bit of a pipeline there in ’23, which we can use as a platform going forward, which helps.”

He added that, “We’ll just keep that under review. It is there as a potential option for us.”

Carvey then highlighted one of the benefits of bringing multi-year cat bond cover into Conduit Re’s retro program, in that it can be secured away from the firm’s traditional 1/1 retro renewal date.

“There is, I think, some benefits for any business in having the purchasing spread at different renewal dates during the year.

“Rather than having it all congested or congregated at 1/1, you’ve got a mid-year aspect to it, which I think helps,” Carvey said.

Adding again, “But we’ll just keep that under review and see how the market plays out through the year.”