Markel CATCo raises over $1.8bn to meet renewal demand

Markel CATCo Investment Management Ltd., the collateralized reinsurance and retrocessional investment fund manager, has raised over $1.8 billion of new capital from investors to ensure continuity for its ceding clients and meet renewal demand for its products.

Markel CATCo has raised the more than $1.8 billion for its private ILS fund thanks to capital commitments from both existing and new investors in its strategies.

In the wake of the major industry losses from recent catastrophes including hurricanes Harvey, Irma and Maria, ILS and collateralized reinsurance players need to recapitalise in order to offer their cedents continuity at the upcoming January renewal season.

With Markel CATCo’s main product being a pillared collateralized retrocession offering, the company has needed to establish large reserves for these recent loss events, meaning a significant amount of capital has been locked up until the full extent of the impacts to its funds are understood.

As a result raising new capital from investors is one way to ensure that it can bind all its renewals for existing as well as new cedents and this $1.8 billion plus capital raise, which incidentally is one of the largest individual capital raises in ILS market history, will ensure Markel CATCo can continue to service its client-base at 1/1 2018.

The company said that this capital raise means it can fund all of its January 1st 2018 reinsurance and retro contract renewals, as well as some of the increased demand it is seeing from reinsurance buyers.

Tony Belisle, Chief Executive Officer of Markel CATCo Investment Management Ltd., commented on the capital raise saying, “The Markel CATCo team is extremely grateful for the tremendous support demonstrated by our investors and, equally importantly, by the buyers of our reinsurance protections and the loyalty they have shown towards our unique product offering.

“The ability to raise and deploy this significant amount of additional capital is testament to the Markel CATCo team focus on providing both exceptional, long term returns to our investors and, also, the highest levels of service to our reinsurance clients. I thank each one of them for their professionalism, hard work and commitment.”

Markel CATCo is also in the middle of raising more capital for its stock exchange listed retrocessional reinsurance fund as well, so could come into the January renewals with even more capacity available.

The additional capital raise for the CATCo Reinsurance Opportunities Fund Ltd. will be undertaken through the issuance of new C shares in the fund and this capacity is expected to be put to work underwriting new business opportunities at 1/1 and Markel CATCo expects it will be sufficient to satisfy additional demand from existing and new reinsurance or retro clients.

It’s impressive that Markel CATCo has been able to raise such a large amount of capital so quickly following the recent catastrophe events and that it expects to meet all its renewal demand and some demand for more capacity from existing and new buyers.

It means the ILS fund manager could come out the other side of the January renewals with more capital and an even larger share of the key retrocessional market.

With this retrocession market being the one slated to see the highest price rises at renewals as well, this capital means Markel CATCo will be able to make the most of any higher rates and increased demand on behalf of its investor base.