CATCo Reinsurance Opps Fund Ltd Portfolio Update (9474Q)
November 13 2012 - 2:01AM
UK Regulatory
TIDMCAT
RNS Number : 9474Q
CATCo Reinsurance Opps Fund Ltd
13 November 2012
CATCo Reinsurance Opportunities Fund Ltd. ("the Company")
Portfolio update - Costa Concordia update and commutation
To: SFM, London Stock Exchange Date: 13 November 2012
and Bermuda Stock Exchange
The cruise ship Costa Concordia partially sank on the night of
13 January 2012 after hitting a reef off the Italian coast and
running aground at Isola del Giglio, Tuscany, requiring the
evacuation of the 4,252 people on board. Thirty people are known to
have died, two others were still missing as of October 2012, and
presumed dead, and 64 others were injured, at least two
seriously.
Captain Francesco Schettino had reportedly deviated from the
ship's computer-programmed route to treat people on Isola del
Giglio to the spectacle of a close sail-past or near shore salute.
The ship then hit a reef off Isola del Giglio and started to take
in water, flooding the engine room and generators, causing the ship
to drift for more than an hour off the eastern shore of Isola del
Giglio before running aground and being evacuated.
While the final cost is not yet known, the international group
of P&I Associations' actual and expected insured loss estimate
(net of a USD10m deductible) for Protection and Indemnity (Wreck
Removal and Cargo/Crew/Passenger Liability) has increased by
approximately USD130m, from circa USD521m to USD652m. The final
settlement for the Hull & Machinery ("H&M") / Increased
Value ("IV")amounted to circa USD520 million.
This results in a current industry estimate for insured loss of
circa USD1.172 billion as detailed above.
The Master Fund's investment portfolio does not have any
exposure to this marine event for industry losses below USD1.25
billion. However, the wreck removal plan has a new predicted
timeline that estimates the parbuckling and refloating to be
complete by Spring of 2013. This time schedule is dependent in part
upon subcontractor deliverables and schedules, and will preserve
the upcoming summer season. The Managers believe that, as the
estimated timetable continues to change, coupled with the
complexity and size of the wreck removal, the industry loss
estimates may continue to increase.
The maximum exposure to Offshore Marine risk was 3% of the
'expected' 2012 net returns (4% on a gross basis), assuming a total
loss to this cover from this event. Two reinsurance counterparties
have retrocessional coverage from CATCo Re Ltd relating to this
disaster.
The Board of Directors announces that agreement has been reached
to fully and finally commute 100% of the exposure with respect to
one of the counterparties (representing circa 40% of the total
Offshore Marine portfolio exposure), the cost of which represents
circa 1.5% which compares to the gross 4% exposed to Offshore
Marine risk.
This commutation is a settlement agreement reached between the
reinsured counterparty and CATCo Re Ltd by which the reinsurance
obligation is terminated by an agreement by the reinsurer to pay
funds at present value that are not yet due under the reinsurance
agreement. The obligations with one of the reinsurance
counterparties for future payments related to the Costa Concordia
event are fully terminated.
As a result of this agreement, the Company avoids side pocket
investments at the year end and locking-up capital that cannot
yield a return in 2013. The manager has already deployed new
Offshore Marine risk for 2013 at significantly increased pricing.
This 2012 commutation will be included in the Net Asset Value
calculation for October 2012.
It is the Manager's intention to seek a further commutation, and
renewal, with the other reinsurance counterparty prior to the year
end.
For further information, please contact:
Jason Bibb
CATCo Investment Management Ltd
Telephone: +1 (441) 531 2227
Email: jason.bibb@catcoim.com
David Benda / Hugh Jonathan
Numis Securities Limited
Telephone: +44 (0) 20 7260 1000
John Whiley
Prime Management Ltd
Tel: +1 (441) 295 0329
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
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