Markel CATCo buyout process facing challenges as court calls for more info

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Activity surrounding the buyout terms proposed to investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds looks set to drag on, after a court appearance in Bermuda ended with Markel agreeing to provide additional information to creditors, we understand.

Markel CATCo logoThe civil and commercial Supreme Court hearing in Bermuda yesterday saw Markel attempting to push for the acceleration of the process.

We’re told this was by seeking approval for some creditor meetings to take place, which we understand was hoped to move things along faster by getting additional investors onside for its proposal.

However, with a range of issues raised by investors, we’re told that by the end of the hearing Markel had agreed to provide more evidence and information to its creditors.

As a result, the process is now expected to run into 2022, perhaps well into next year, which we understand could push beyond certain key agreement dates it has with some creditors of the Markel CATCo reinsurance investment funds.

Sources said that, if this does drag on well into 2022, the risk is that the buyout process falters, or fails to gain the support it needs, and it also raises the prospects of further claims being raised against Markel CATCo by investors.

We expect there may be an update from Markel or Markel CATCo to explain any new timeline for the process, if indeed it does get delayed.

It’s becoming an increasingly interesting case, as the revised buyout proposal from Markel CATCo appears to be at a reasonably strong valuation for the remaining net asset value in the retro reinsurance funds.

So any claims from investors, that could prolong the process, seem to be more related to prior reserving practices and whether any wrongdoing caused their capital to be exposed to losses or loss creep unnecessarily, rather than the actual valuation of what is left in the funds and side pockets.

Should any such claims cause the buyout process to be delayed further into next year, it may end up delaying the return of capital for far longer, meaning those investors supporting the buyout could find themselves waiting a long time to realise the remaining value in their investments.

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