CATCo listed retro fund enhances dividend, cites investor demand

by Artemis on November 15, 2017

Markel CATCo Investment Management Ltd., the collateralized reinsurance and retrocessional investment fund manager, which is in the middle of raising new capital for its listed retrocession fund, has announced its intention to enhance the fund’s dividend policy, citing investor demand.

Having already raised over $1.8 billion for its private ILS funds in recent weeks, Markel CATCo is in the process of raising further equity capital for its stock exchange listed retro reinsurance fund through an initial raise of $250m or more.

In response to investor demand for the new issuance of C Shares and following feedback from both existing and new investors in the listed retro investment strategy, the Board of the Markel CATCo managed fund is enhancing the dividend policy, to add a new special dividend.

Investors in the fund already benefit from an annual dividend of LIBOR plus 5% of the Net Asset Value per share at the end of each fiscal year. Now the Board has laid out its intention to also offer a special dividend.

Both dividends will remain at the discretion of the Board, so only paid when the fund can afford and it makes sense to. The new special dividend will be applicable to both existing investors and those subscribing to the new issuance of C Shares.

The new special dividend is expected to be, “equal to the level of accumulated profits of each shares class in the relevant fiscal year in excess of LIBOR plus 7.5%,” the company said.

The announcement of a new special dividend is a clear sign that investors are seeking to enter the fund in the current capital raise, but would seek assurances that they receive suitable dividend payments when the retrocessional reinsurance fund has had a profitable year.

This could serve to make the fund an even more attractive investment prospect for certain investors, especially those looking for income driven by dividends.

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