Swiss Re Insurance-Linked Fund Management

Xactanalysis Insights and PCS

Markel CATCo return of capital continues, with $17.8m share repurchase


The unwinding of the Markel CATCo retrocessional reinsurance investment funds and the return of capital to investors continues apace, with a further US $17.8 million now being delivered back to shareholders in the London-listed retro fund.

Markel CATCo logoAlmost a fortnight ago, Artemis reported that favourable development across the CATCo retrocessional reinsurance investment portfolio had delivered almost $82 million back to investors in the strategy across the first nine months of 2022.

It now appears the total is set to reach almost $100 million in capital returned, with this share repurchase and more likely to be returned from the private retro investment fund strategy at the same time, we suspect.

We’ve documented the various developments through the running off of Markel CATCo’s retrocessional reinsurance portfolios, with significant recovery of value as loss reserves have proved more than adequate in many cases, as reported by the listed CATCo Reinsurance Opportunities Fund.

During Q3 2022, $53.4 million of favorable loss reserve development on the run-off of retro reinsurance contracts written by Markel CATCo Re Ltd. was returned to third-party investors.

The latest announcement, this morning from the London-listed retro fund company, states that Markel CATCo will return an aggregate amount of approximately $17.8 million to investors in the strategy on 29th November 2022.

This repurchase involves a significant proportion of the remaining shares outstanding in this strategy, with 1,379,103 Ordinary Shares and 754,104 C Shares to be redeemed.

That amounts to roughly 91.73% of the listed retro fund’s total issued share capital, or 92.36% of the Ordinary Shares currently in issue, and 90.60% of the C Shares.

Given the steady return of value and unwinding of retro reinsurance contracts, this repurchase will be effected at a much higher net asset value than previous share buy-backs, to deliver as much value back to investors as possible.

Which also means those investors that bought into the CATCo listed ILS fund strategy when its shares NAV was especially low, will stand to profit from this.

It’s anticipated that a return of capital will also be occurring for the private retro reinsurance investment funds run by Markel CATCo, with an equivalent amount of value to be returned to investors in those much larger strategies.

The running-off and return of capital continues apace and after this the remaining share capital will be held to support contracts not yet commuted, but it suggests the process is nearing its completion meaning costs born by Markel will end before too much longer as well.

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