To elaborate on Zak’s answer a little, the issue stems from these four edges at the corners of the mesh:
When you use the Bevel modifier with the Angle limit method, only sharp edges will be beveled. These four edges are certainly not sharp—the faces they’re connected to are completely flat—so they don’t get beveled at all. This produces corner geometry ...
This is happening because the diagonal edges, the ones creates when you inset/extruded and scaled inward are not beveling. They are not beveling because there isn't a sharp edge.
You can either use the modifier without using the limit method of "angle" or bevel manually.
Honestly, i don't know why it does not work, but i have some tips for you.
Fake it 'til you make it:
Do not use your ship to create the waves - it has to much details, too complicated. Just slows down your computer - although i am not sure whether you are working on a render farm, because your blend file is so fully packed and on my macbook i got 0.1 fps ...
You probably need more topology, like this (use a Shrinkwrap to make it stick to a cylinder shape):
The pinching is almost not noticeable:
If you want a better result I guess you need to add more topology:
figured it out...
forrest through the trees...
internal faces at the junctions...
but the next question is how to remove about a thousand of these faces...?
at the moment I am having to isolate each junction pull it up on edit mode, remove the faces, then repeat.
Well, you can't exactly exclude the vertices rather you can tell the subdivision modifier to not affect some vertices. To do that follow the steps
Select the vertices you need to exclude
Press Shift + E
Drag your mouse up to set the crease to the value of 1
Create your cylinder with a reasonable amount of subdivision, (which will eventually separate vertex groups), and give it 2 vertex groups; mine are called 'Shell' and 'Rim', for convenience. You don't need to allocate to them: they're placeholders.
Give the cylinder a Solidify modifier. In the modifier there's an 'Output Vertex Groups' section. There, you ...
Finally figured out what has been going on.
For some reason Blender is coded to stack the Standard Subdivision settings ONTOP of the Adaptive Subdivision. So if you uncheck Adaptive Subdivision, and have any subdivisions in the Render Subdivision settings, those subdivs are added along with the adaptive ones.
Set original subdivision settings to 0 before ...