CATCo launches capital raise for retro Reinsurance Opportunities Fund

Bermuda-headquartered CATCo Investment Management, the reinsurance and retrocession linked investment and fund manager, has launched a new placement programme and an initial placing, as it seeks to raise new equity capital for its flagship listed fund.

The investment manager said just over a week ago that is was considering raising new equity capital for the stock exchange listed retrocessional reinsurance focused CATCo Reinsurance Opportunities Fund Ltd. in advance of the key January renewal season.

In January, much of the retrocessional reinsurance portfolio that the fund invests in will come up for renewal. By raising additional equity capital for this fund, CATCo Investment Management, which announced its acquisition by insurance, reinsurance and financial services group Markel Corporation this month, can likely grow its share of the market further, or add additional contracts, to aid scale and diversification for the retro linked fund.

The placing programme launched today will allow CATCo Reinsurance Opportunities Fund Ltd. to issue up to 750 million new shares over a twelve month period. It should be noted that this is not a target, simply a maximum placing allowance over the course of the next year giving the flexibility to raise up to that amount across a number of equity raises.

A prospectus has also been published by CATCo to provide potential investors with details of its offering.

The initial placing will see any capital raised issued as C Shares, at $1 per share. The assets will be held in cash or near cash until the January 2016 reinsurance renewals, after which they are expected to be fully invested in accordance with the fund’s investment policy. The shares will later be converted to Ordinary Shares.

CATCo has also published a set of proposals to existing investors, seeking approval for items related to the running of the fund.

The initial placing is underway immediately and CATCo expects to announce the results at the end of October, with newly issued shares expected to be admitted for trading on the 2nd November.

It will be interesting to see what level of interest can be raised in the fund, which although accessible via the stock exchange listing has not raised new equity capital for a while.

Clearly CATCo sees attractive retrocessional reinsurance market conditions ahead in January, which it feels that investors could benefit from, ultimately helping it to continue to grow its role in the retro market.