CATCo Investment Management have published the annual financial report for the year of 2011 for their flagship fund, the CATCo Reinsurance Opportunities Fund. Despite a record year of catastrophe losses during 2011 CATCo’s fund still managed to generate a positive return for their investors and shareholders.
CATCo achieved a net asset value total return of 5.09% on their Ordinary Shares and a net asset value total return of 8.58% on their C Shares class. Given the high-risk lines of business that CATCo write in the retro market, largely geographically diversified earthquake and windstorm lines of business, to have achieved a positive return at all is testament to the way the firm diversify investments across multiple risk pillars, thus lowering the risk to investors from any single catastrophe events.
CATCo now manages approximately $350m through their fund and the total funds invested by the managers now exceeds $1 billion. All of the firms available capital has been deployed, much of it in the 2012 retrocessional reinsurance, into more than 35 non-correlated risk perils (largely storm and quake across many geographical areas).
For 2012 CATCo project a much greater return than 2012. Obviously this is dependent on the number of major catastrophes experienced around the globe in 2012, but CATCo’s report says that if the world experiences a more tolerable level of natural catastrophes then the shareholders and investors can look forward to much higher returns in 2012. Recently CATCo said that if there were no loss events they would return as much as 23%.
CATCo have been pretty aggressive on the fund raising front during 2011 but now feel well capitalised and said that they do not expect to undertake any further capital raising activity for the firm in 2012, unless there are significant catastrophe events which affect them.