Tony Belisle, the Chief Executive Officer of Markel CATCo Investment Management Ltd., has sought to demonstrate his alignment with investors in his firms stock exchange listed retrocessional reinsurance ILS fund strategy by acquiring 1.5 million shares across all classes.
Belisle acquired 1 million Ordinary shares in the listed retrocessional reinsurance fund, the CATCo Reinsurance Opportunities Fund, back in May and has now followed that share purchase up with an acquisition of another 500,000 shares in the C Class announced today.
This follows the fund reporting a significant increase in its loss expectations from the 2017 hurricanes and other catastrophe events, bolstering its reserves for 2017 catastrophe losses by another 19.5% of net asset value.
On top of the previous reserves set aside for the impacts from the hurricane and California wildfire events, the listed reinsurance fund’s Ordinary shares net asset value has been down as much as -41.4% from prior to the loss events.
The significant addition to the 2017 loss expectations came largely from increased estimates for industry losses caused by hurricane Irma in Florida, as well as some deterioration in loss estimates for the California wildfires.
The acquisition of shares at a time when their valuation is at their lowest likely signifies a desire from Belisle to demonstrate alignment with the fund investors, but also perhaps an understanding that the shares could face some level of recovery once the final losses from 2017 are understood.
There is always a chance that some loss reserves may get released, as the final costs of the hurricanes and wildfires become clearer and the losses under CATCo’s retrocessional contracts are fully realised.
The shares could also see price improvements should the 2018 hurricane season remain benign, especially as the Markel CATCo portfolio will be poised for a higher return this year thanks to better rates achieved at the January renewals.