Markel acquisition of CATCo Investment Management completes

Insurance, reinsurance and financial services group Markel Corporation has officially completed its acquisition of substantially all of the assets of reinsurance and retrocessional linked investment fund manager CATCo Investment Management Ltd.

CATCo Investment Management, which provides fully collateralized reinsurance and retrocessional coverage to more than 35 global reinsurance buyers and manages investment funds for its third-party investors, will now operate as Markel CATCo Investment Management Ltd. (Markel CATCo).

The full CATCo team, led by Chief Executive Officer Tony Belisle, has transferred across to Markel CATCo.

Richard R. Whitt, President and Co-Chief Operating Officer of Markel, commented on the announcement; “We welcome Tony and the CATCo team into the Markel family. The reception by existing CATCo reinsurance buyers and investors to the newly established Markel platform has been overwhelmingly positive. We truly will be hitting the ground running.”

As we wrote previously, Whitt explained during Markel’s recent earnings call that the CATCo acquisition was inspired by a desire to be more meaningful in the ILS space.

CATCo has built a strong reputation for itself, both in terms of the reinsurance and retro products it sells to buyers as well as for the range of investment opportunities it manages. Its London and Bermuda stock-exchange listed CATCo Reinsurance Opportunities Fund Ltd. is just part of the story, with a number of other unlisted funds and managed investments driving its growth in assets managed as well.

Whitt further remarked, “Joining CATCo’s insurance linked investment management capabilities alongside Markel’s traditional reinsurance capabilities should make for a powerful combination.”

Tony Belisle, Chief Executive Officer of Markel CATCo Investment Management Ltd., added; “I am delighted with the successful closure of the transaction and the bringing together of two fantastic organisations that share similar goals and cultures.

“The extra support our new owner brings will enable us to offer enhanced product ranges and secure capital efficiencies for our growing number of reinsurance buyers. With a significant amount of next year’s renewals already committed and projected AUM expected to exceed $3bn, 2016 is shaping up to be a positive and exciting year.”

A number of changes are being made to the structure of the investment operations in order to reflect the new branding and joining with Markel.

For example the CATCo Reinsurance Opportunities Fund, the London-listed structure, will now conduct the majority of its investment activities through the Markel CATCo Diversified Fund (the “Markel CATCo Master Fund”), a segregated account of Markel CATCo Reinsurance Fund Ltd. (the “Markel CATCo SAC”), instead of the Master Fund, being CATCo Diversified Fund, a segregated account of CATCo Reinsurance Fund Ltd.

To effect this change the investment in the Master Fund will be redeemed at the 1st January and 100% of the assets, aside from any side-pocket investments which will be run-off, will be reinvested into the new Markel CATCo Master Fund.

The reinsurance vehicle used for entering into the retrocessional reinsurance contracts is also changing and all new reinsurance business will be conducted via Markel CATCo Re Ltd.

The proceeds of the recent capital raising exercise, which first raised $88.4m for the Reinsurance Opportunities Fund followed by an additional $3.4m, will be invested directly in the new Markel CATCo Master Fund around 1st January.

Once the acquisition related work is completed the Markel CATCo brand will be the one seen in the market from January.

Bringing together the Markel scale with CATCo’s underwriting and investment management expertise will make a compelling pairing both for cedents and investors. It will be interesting to watch how the manager develops from here.