A schedule has now been set for the beginning of the share buy-backs for the listed retrocessional reinsurance investment fund operated by Markel CATCo Investment Management, with a portion of the shares of the CATCo Reinsurance Opportunities Fund set to be repurchased in September.
The Board of the Markel CATCo exchange listed managed fund recommended an orderly run-off of the fund’s portfolios of retrocessional reinsurance risk investments, which shareholders voted in favour of.
The first stage in this process is to return what available cash it can to its shareholders by way of a share buy-back, allowing investors to redeem a portion of their holdings as quickly as possible.
The first step involves a tender offer for $14.6 million of the fund’s Ordinary Shares and $24.4 million of it’s C Shares.
It’s possible those figures could rise slightly, as the fund manager’s expect further cash to come into the fund at the end of August, likely from reinsurance contracts that are commuted after going off-risk. That could take the amount of Ordinary Shares repurchased to $15.4 million and C Shares to $28 million.
The Ordinary Shares are set to be repurchased at a single price in a range between 10 cents and 22.5 cents per share, while the C Shares will be acquired at a single price in a range between 17 cents and 35 cents per share.
The latest share prices as of this morning are 15 cents per Ordinary Share and 23 cents per C Share, so falling within the ranges, although slightly to the lower-end of them currently.
The latest NAV calculations for the fund share classes, for the end of June, were at $0.2745 for the Ordinary Shares and $0.5128 for the C Shares.
So, it’s interesting that the ranges for the tender offer do not extend further up towards the latest NAV values, which may dampen some of the more speculative investor interest in the ILS fund’s shares that’s been seen in recent months.
Some hedge funds and special situations fund managers have been buying up shares in these and other loss impacted reinsurance funds in the hope that the final redemption share prices may prove to be closer to the net asset values the funds report.
It does still seem likely that the shares of the CATCo listed fund will be redeemed at a price above the recent share values though, but not as high as NAV’s might have indicated would be possible. However, those investors that bought into these stocks hoping to see a valuation closer to NAV are likely to hold onto them for later rounds of redemptions, it seems.
These first share buybacks will take place on September 9th and shareholders need to register their interest to participate.
This is the first stage in returning capital to the investors in the Markel CATCo managed retrocessional reinsurance funds, a process that will be ongoing for some time to come as the operations and investment strategies are wound down.
In the meantime, Markel Corporation will work on launching its new retrocessional reinsurance insurance-linked securities (ILS) fund platform, while Markel CATCo is fully wound down.