CATCo fund partial redemption completes, running-off nears finality

Investors in the CATCo Reinsurance Opportunities Fund, the stock exchange listed retrocessional reinsurance strategy operated by Markel CATCo, are getting closer still to unlocking the remaining trapped investment collateral, as a partial share redemption completes and the fund nears its run-off.

As we reported recently, the CATCo Reinsurance Opportunities Fund Limited, which is the London-listed retro reinsurance investment fund operated by Markel CATCo, announced a further share redemption.

That redemption of shares has been effected, with 109,246 Ordinary Shares bought back at $41.6197 per Ordinary Share and 74,846 C Shares at $221.6594 per C Share, on 21st November 2024.

Which leaves the CATCo Reinsurance Opportunities Fund with just 4,858 Ordinary Shares and 3,478 C Shares in issue at this time.

The redemption was on a pro-rata basis, so a holder with 1,000 shares had 958 Ordinary Shares, or 956 C Shares, redeemed in the process.

As a result, approximately 95.73% of the remaining issued share capital was redeemed, totalling roughly $4.55 million of Ordinary Share capital and $16.59 million of C Share capital.

With the redemption of these shares, the CATCo retro reinsurance investment fund has now freed the majority of its remaining collateral that had in some cases been trapped for a number of years due to some of the major catastrophe losses that had occurred and resulted in realised, or unrealised, losses to the strategy.

As the number of shares in issue winds down, it frees investors from any obligation and allows the capital to be returned and CATCo itself to move nearer its run-off.

As we had also reported earlier this week, the Board of the London listed CATCo reinsurance investment fund entity is seeking shareholder approval for a winding up of that specific strategy.

That could be effected by year-end, unlocking the remaining capital and returning anything due to investors and parent Markel.

The master fund for the CATCo strategy is in a similar winding down process and this is likely running at a similar pace, which means it may not be too much longer until Markel can recognise any capital it can recover, having funded previous buy-outs to help investors exit.

Favourable development has also continued, for some of the catastrophe threatened positions held in the CATCo portfolio, so there may be additional value to recover there as well.

We’ve reported on CATCo since the start, find all our coverage here.