TIDMCAT
RNS Number : 4348I
CATCo Reinsurance Opps Fund Ltd
08 December 2015
CATCo Reinsurance Opportunities Fund Ltd.
CATCo Investment Management Ltd. Completion of Acquisition and
Restructuring
To: SFM, London Stock Date: 8 December 2015
Exchange and Bermuda
Stock Exchange
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE
UNITED STATES, OR INTO OR FROM CANADA, AUSTRALIA, THE REPUBLIC OF
SOUTH AFRICA OR JAPAN.
This announcement is an advertisement and not a prospectus. This
announcement does not constitute or form part of, and should not be
construed as, any offer for sale or subscription of, or
solicitation of any offer to buy or subscribe for, any shares in
CATCo Reinsurance Opportunities Fund Ltd. (the "Company") or
securities in any other entity, in any jurisdiction, including the
United States, nor shall it, or any part of it, or the fact of its
distribution, form the basis of, or be relied on in connection
with, any contract or investment decision whatsoever, in any
jurisdiction. This announcement does not constitute a
recommendation regarding any securities.
Any investment decision must be made exclusively on the basis of
the prospectus published by the Company on 29 September 2015 (the
"Prospectus") and any supplementary prospectus or supplementary
prospectuses thereto in connection with the admission of shares of
the Company ("Shares") to trading on the London Stock Exchange's
Specialist Fund Market.
Completion of Acquisition and Restructuring
On 8 December 2015, the Acquisition (that was announced on 10
September 2015) completed and substantially all of the assets of
the Investment Manager were acquired by Markel. Substantially all
of the business of the Investment Manager now operates as Markel
CATCo Investment Management Ltd. ("Markel CATCo") and the
Investment Manager's management team, led by Chief Executive
Officer Anthony Belisle, has transitioned into commensurate roles
at Markel CATCo and continues to operate the business from its
Hamilton, Bermuda headquarters, now under Markel's ultimate
ownership.
As a result of the completion of the Acquisition, the Company
will conduct substantially all of its investment activities (other
than in Run-Off Investments) through the Markel CATCo Diversified
Fund (the "Markel CATCo Master Fund"), a segregated account of
Markel CATCo Reinsurance Fund Ltd. (the "Markel CATCo SAC"),
instead of the Master Fund, being CATCo Diversified Fund, a
segregated account of CATCo Reinsurance Fund Ltd.
The Restructuring has been implemented as contemplated in the
Prospectus and as further described below.
In accordance with the Prospectus Rules, the Company will in due
course publish a supplementary prospectus in connection with the
above.
Terms used and not defined in this announcement have the
meanings given in the Prospectus.
Implementation of the Restructuring
To effect the Restructuring, the Company has agreed that its
investment in the Master Fund will be redeemed as at 1 January 2016
and 100% of the cash or other assets that would otherwise have been
distributed to the Company shall be reinvested into the Markel
CATCo Master Fund. It is anticipated that, based on the most recent
NAV and side pocket information, as at 31 October 2015,
approximately 98% of the Company's NAV will be reinvested in this
manner. The remainder of its investment in the Master Fund
(comprising SP Shares in respect of Side Pocket Investments only)
will be wound-down as and when the Run-Off Investments cease to be
in run-off.
Following the completion of the Restructuring, the Company
intends to conduct substantially all of its investment activities
(other than: (a) in the period prior to the redemption of its
Master Fund Shares as at 1 January 2016; and (b) in relation to
Run-Off Investments) through the Markel CATCo Master Fund rather
than the Master Fund, and all new reinsurance business will be
conducted via Markel CATCo Re Ltd. (the "Markel CATCo Reinsurer"),
rather than the Reinsurer. No further investments will be made by
the Company in the Master Fund.
In addition, all of the net proceeds from the Initial Placing
and Offer (net of any funds required for working capital purposes)
are expected to be invested directly in the Markel CATCo Master
Fund on or around 1 January 2016. The proceeds of any Subsequent
Placing under the Placing Programme (net of the expenses of such
issues and funds required for working capital purposes) will also
be invested in the Markel CATCo Master Fund.
No further investments will be made by the Company in the Master
Fund; however, the Company will retain a proportion of its holding
in the Master Fund in respect of any Run-Off Investments, which
will be wound-down as and when the Run-Off Investments cease to be
in run-off. Cash received by the Master Fund when Run-Off
Investments are wound-down will be distributed to Master Fund
Shareholders (including the Company) on the redemption of their
Master Fund Shares. The Company intends to use such amount for
investment purposes.
Consequently, from early January 2016 onwards, the Company is
expected to invest in both the Markel CATCo Master Fund and, until
the Run-Off Investments have been wound-down, the Master Fund. In
connection with this, the Company has revised its investment policy
such that, with effect from 1 January 2016, substantially all of
its assets will be invested in the Markel CATCo Master Fund.
Neither: (a) the Company's continued investment in the Master Fund
in connection with any Run-Off Investments; nor (b) the Company's
entry into the Investor Transfer Direction and the Subscription
Agreement (each as defined below), shall constitute a breach of the
Company's investment policy. The Board does not consider that such
changes amount to a material change to the Company's investment
policy as it considers the Master Fund and the Markel CATCo Master
Fund to represent materially the same investment proposition as
they are materially the same in nature and have been established on
materially the same terms.
New Material Contracts
In connection with the completion of the Restructuring, the
Company has entered into each of the following material contracts,
in each case on 8 December 2015:
The Investor Transfer Direction
Under the direction from the Company to the Master Fund SAC (the
"Investor Transfer Direction"), the Company has agreed to: (a)
redeem, as of 1 January 2016, all of its Master Fund Shares (save
for any SP Shares); and (b) immediately upon such redemption,
contribute the full amount of such proceeds to the Markel CATCo
Master Fund in accordance with the Subscription Agreement, in lieu
of any distribution being made to the Company.
The Investor Transfer Direction further provides that the
following transactions are intended to occur on or around 1 January
2016 (in addition to the cash subscription into the Markel CATCo
Master Fund): (a) the Reinsurance Agreements relating to certain
risk exposures that are scheduled to terminate after 31 December
2015 will be transferred by novation from the related segregated
accounts at the Reinsurer to the corresponding segregated accounts
the Markel CATCo Reinsurer; (b) the assets of the Master Fund and
the Reinsurer linked to the segregated accounts described in (a)
will, at the direction of the relevant investors, be contributed to
the corresponding segregated accounts at the Markel CATCo Master
Fund and the Markel CATCo Reinsurer; and (c) other assets of or
attributable to the Master Fund will, at the direction of the
relevant investors, be contributed to the Markel CATCo Master
Fund.
The Subscription Agreement
The subscription agreement entered into by the Company in
connection with its investment in the Markel CATCo Master Fund
under the Investor Transfer Direction (the "Subscription
Agreement"), contains the terms and conditions on which the
Company's subscription for Markel CATCo Master Fund Shares pursuant
to the Investor Transfer Direction will be made. The Subscription
Agreement is on materially the same terms as the Master Fund
Subscription Agreement. Any further subscription by the Company for
shares in the Markel CATCo Master Fund is expected to be made on
the terms of the Subscription Agreement.
The New Investment Management Agreement
Under the investment management agreement between the Company
and Markel CATCo (the "New Investment Management Agreement"), the
Company has appointed Markel CATCo as its investment manager in
place of the Investment Manager, except in relation to certain
portfolio management services for the Run-Off Investments, which
will continue to be provided by the Investment Manager. Save for
the foregoing, the New Investment Management Agreement is on
materially the same terms as the Investment Management Agreement,
other than the monthly fee payable to Markel CATCo for secretarial,
accounting and administrative services will be 1/12 of US$275,000
(rather than of US$200,000) and the indemnity given to Markel CATCo
by the Company is also in favour of Markel CATCo's subsidiaries and
other affiliates, and their respective officers, directors,
employees and agents.
The New Control Agreement
The control agreement between the Company, Markel CATCo, the
Markel CATCo SAC (in respect of the Markel CATCo Master Fund) and
the Markel CATCo Reinsurer (the "New Control Agreement") provides
the Company with control of its investment in the Markel CATCO
Master Fund on materially the same terms as the Control Agreement
and, inter alia, prohibits the Markel CATCo SAC from changing the
investment objectives, policies and restrictions of the Markel
CATCo Master Fund, without the prior consent of the Company.
The Revised Investment Management Agreement
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