CATCo Investment Management, the specialist Bermuda based reinsurance-linked investment business who manage around $2 billion of retrocessional portfolios for their clients, have announced that the net asset value of the CATCo Reinsurance Opportunities Fund increased by around 5.3% from $339.8m to $357.9m during the first six months of 2012. The positive performance reflects the gain on CATCo’s 2012 investment portfolio offset by the loss development of 2011 catastrophe events.
Anthony Taylor, Chairman, said; “The global retrocessional pricing for the Company’s protection remains favourable given the appetite from reinsurance counterparties. Being fully asset backed, the predicted industry retrocessional capacity erosion experienced during the year from other collateralised reinsurers has created significant advantages for the Company.”
CATCo recently announced that they were closing their side-pocket associated with their New Zealand and Japanese catastrophe exposures which have now been fully reserved for any losses. The special class of C Shares that were created by the side pocket have been merged back into their master fund Ordinary Shares. Ordinary shareholders saw a small loss due to these events, which is unsurprising given the magnitude of the reinsurance losses from these two huge events from early 2011.
Anthony Taylor added; “The Board is pleased with the progress during the first half of the year with the Company remaining focused on low frequency high-severity exposure profile. The Board remains committed to ensuring that the investment targeted returns are achieved.”
CATCo will now be looking ahead to the 1st January renewals with hopes to deploy their full capacity at attractive rates to achieve their targeted returns.
By the end of July 2012, in their latest monthly report, CATCo reported their net asset value as $362.5m demonstrating that their fund continues to gain through the summer, hurricane season months. As the hurricane season progresses, CATCo expect to realise benefits from increased levels of premium due to the seasonality of global catastrophic events and the effect they have on incomes received. As a result their NAV should increase further and returns should be particularly attractive for their investors over the summer months as long as no hurricanes threaten land or other major catastrophe events occur.