Old Mutual continues to grow stake in Markel CATCo listed fund

by Artemis on June 7, 2017

Investment and finance giant Old Mutual plc has continued to increase the stake it holds in the shares of the Markel CATCo managed, exchange-listed retrocessional reinsurance fund the CATCo Reinsurance Opportunities Fund Ltd.

Old Mutual has been the largest investor in the CATCo Reinsurance Opportunities Fund, topping the list of those allocating to the retrocessional reinsurance focused investment strategy.

Recently, ILS and reinsurance linked fund manager Markel CATCo took the opportunity to raise some new capital, in order to provide it with additional capacity for the mid-year reinsurance and retrocession renewals, and according to filings Old Mutual participated, increasing its stake in the fund.

At the beginning of March Old Mutual plc held almost 67 thousand shares in the CATCo Reinsurance Opportunities Fund, which worked out as 17.74% of the ILS funds issued share capital, making it the largest holder at the time.

Markel CATCo raised an additional $46 million of capital for the CATCo Reinsurance Opportunities Fund at the end of May, taking the funds total assets under management to $500 million for the first time. Old Mutual, it seems, took a chunk of these newly issued shares.

On the 30th May, the date of the new share issuance, Old Mutual’s holdings in the fund increased to over 72 million shares, with its stake rising to 18.47% of the issued share capital, keeping it as the largest single investor in Markel CATCo’s fund strategy.

The shares Old Mutual holds in the retrocessional reinsurance fund are held within strategies managed by its Old Mutual Global Investors asset management unit, which runs numerous multi-asset class strategies, with alternatives such as reinsurance-linked investments making up a component of some of them.

Large multi-asset class managers, like Old Mutual, show a clear and increasing appetite for adding insurance-linked investment returns to their client offering, resulting in more inclusion of ILS and reinsurance-linked funds in multi-asset class strategies.

As large asset managers discover the reinsurance and insurance-linked securities (ILS) asset class and the benefits low-correlated insurance-linked assets can provide to a diversified portfolio, we can expect incremental capital to flow into the ILS market from these sources.

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