CATCo fund shareholders approve return of value proposal

Shareholders in the CATCo Reinsurance Opportunities Fund Ltd., a London stock exchange listed retrocessional reinsurance-linked investment fund, have approved the proposal to return value to them through an additional distribution.

After a general meeting held today, the Board of the CATCo Reinsurance Opportunities Fund announced that shareholders had approved the resolutions proposing the return of value and a share capital consolidation measure.

Shareholders in the fund were given a choice of how to receive the additional capital distribution and after voting 85.9% chose an Income Alternative and Capital Alternative, representing approximately US$63.6 million, while 14.1% elected for a Reinvestment Alternative, representing approximately US$10.4 million.

The reinvestment alternative allows investors to receive the distribution as new shares in the CATCo Investment Management operated reinsurance and retrocessional reinsurance fund. It is expected that 9,705,008 Reinvestment Ordinary Shares will be issued and admitted to trading on 29th January 2014 as a result of the approval.

A share consolidation will occur after the distribution to ensure that the overall change in the Company’s Net Asset Value resulting from the Return of Value is reflected in the Ordinary Share net asset value.

Shareholders in the CATCo Reinsurance Opportunities Fund are effectively receiving, between the capital and reinvestment, $74m of additional value returned to them, not a scheduled dividend, as the investment manager seeks to return value accumulated through a very low loss year.

CATCo is also set to return capital from a commuted Japan quake exposure, which will also benefit some of its shareholders thanks to the prudent reserving undertaken by the investment manager after this catastrophe event.

Also read our article on CATCo’s 2014 portfolio: CATCo writes above target, lower risk, better protected 2014 portfolio.