CATCo Reinsurance Opps Fund Ltd Net Asset Value and Portfolio Update (3620B)
January 30 2020 - 2:01AM
UK Regulatory
TIDMCAT
RNS Number : 3620B
CATCo Reinsurance Opps Fund Ltd
30 January 2020
FOR IMMEDIATE RELEASE
30 January 2020
CATCo Reinsurance Opportunities Fund Ltd. (the "Company")
Net Asset Value ("NAV") and Portfolio Update
To: SFS, London Stock Exchange and Bermuda Stock Exchange
December 2019 NAV
Markel CATCo Investment Management Ltd., the Company's
Investment Manager (the "Investment Manager"), announces the
unaudited Net Asset Value ("NAVs") of the Company's Ordinary Shares
and C Shares of $0.2659 and $0.5157 respectively, as at the close
of business on 31 December 2019.
Estimated annual returns generated from the 2019 portfolio were
approximately 4.3 per cent.
2017 Side Pockets
As previously announced, the Company's Ordinary Shareholders
continue to be exposed to uncertainty regarding losses arising from
2017 major events, through the 2017 Side Pocket Investments. The
reduction of c. 3.6 per cent in the Ordinary Share NAV which
occurred during December 2019 is driven by further claim
settlements in relation to 2017 events, predominantly Hurricane
Irma. This adjustment is equivalent to a c.1 per cent deterioration
in the original Ordinary Share annual performance for the financial
year 2017.
2018 Side Pockets
The 2018 Side Pocket loss reserves have been maintained at their
existing levels during December 2019, and the Investment Manager
currently considers these existing 2018 loss reserves to be
sufficient, based on the latest industry loss information
available.
2019 Side Pockets
The size of the 2019 Side Pocket as a percentage of NAV is equal
to 26 per cent for the Ordinary Share NAV and 39 per cent of the C
Share NAV as at 31 December 2019. The 2019 Side Pocket is expected
to reduce in the coming months as cedants release capital and the
Investment Manager is able to return capital to Shareholders.
However, the exact timing and amount of this remain to be
determined.
Repayment of non-trapped 2019 Portfolio
The Investment Manager continues to work closely with its
cedants to agree the release of the 2019 portfolio's capital, a
process which in previous years could be undertaken to a large
extent pre year-end as part of the renewal negotiation.
The Investment Manager expects approximately 17 per cent of the
Company's investment in the 2019 portfolio (equivalent to $4
million for Ordinary Class shares and $17 million for C Class
shares) to be released by the Master Fund to the Company in
mid-February 2020. The Investment Manager expects that the Board
will determine the timing and method of this capital distribution,
following discussions to be held with Shareholders by the Company's
brokers, Numis Securities Limited.
Overview of existing Side Pocket Investments
While the capital return schedule is driven by the contractual
arrangements with the cedants, capital releases from prior year
Side Pocket Investments are also expected during Q1 2020, subject
to the approval of the Bermuda Monetary Authority. In particular,
the Investment Manager is currently working to release further
capital from both 2016 and 2018 Side Pocket Investments.
Shareholders are reminded that cedants will typically release
capital that is held in Side Pocket Investments on the earlier of:
(i) the capital no longer being needed to cover potential losses
(in accordance with the terms of the relevant reinsurance
contract); or (ii) 36 months from the end of the relevant risk
period.
The following table outlines the split of Side Pocket
Investments held by the Ordinary Shares and C Shares respectively
as at 31 December 2019:
Ordinary Shares Value per Side Pocket Investments
Share % of Ordinary Share NAV
SPI 2016 $0.03 11%
---------- -------------------------
SPI 2017 $0.08 30%
---------- -------------------------
SPI 2018 $0.07 26%
---------- -------------------------
SPI 2019 $0.07 26%
---------- -------------------------
C Shares Value per Side Pocket Investments
Share % of C Share NAV
SPI 2018 $0.27 53%
---------- ------------------------
SPI 2019 $0.20 39%
---------- ------------------------
Australia Wildfires
The Investment Manager continues to monitor the devastating
effects of the Australian Wildfires. However, it remains too soon
to be able to confirm what impact, if any, the Australian Wildfires
will have on the 2019 portfolio. This has resulted in higher levels
of trapped capital on the 2019 portfolio due to the proximity of
the event to year-end. The Investment Manager expects further
clarity on this in the first half of 2020.
Management Fee Reduction
The Investment Manager has agreed to reduce the Management Fee
on Side Pocket Investments for the financial year 2020 by 50 per
cent of the original fee of 1.5 per cent. This is equal to an
annual Management Fee of 0.75 per cent. The 2019 Management Fee on
Side Pocket Investments had been reduced by 33.33 per cent to 1 per
cent. The Management Fee on Side Pocket Investments will be
reviewed again at the end of the current financial year.
This announcement contains Inside Information as defined under
the Market Abuse Regulation (EU) No. 596/2014.
For further information:
Markel CATCo Investment Management Ltd. Numis Securities Limited
David Benda / Hugh Jonathan
Judith Wynne Telephone: +44 (0) 20 7260
General Counsel 1000
Telephone: +1 441 493 9005
Email: judith.wynne@markelcatco.com
Mark Way
Chief of Investor Marketing
Telephone: +1 441 493 9001
Email: mark.way@markelcatco.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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