Retrocessional reinsurance focused investment manager Markel CATCo Investment Management has warned that investors in the 2019 portfolios of its listed fund are exposed to potential losses from recent catastrophe events hurricane Dorian and typhoon Faxai.
The investment manager is currently running off its retrocessional reinsurance investment strategies, but having written new pillared contracts for the 2019 underwriting year in January, investors in those still in-force portfolios will be exposed to any major catastrophe events occurring this year.
Hurricane Dorian and typhoon Faxai appear to be the two most severe events so far in 2019 and as a result Markel CATCo is warning of the exposure to any losses that impacted its retro portfolio.
The manager said that both Ordinary Shareholders and C Shareholders in its CATCo Reinsurance Opportunities Fund are exposed to potential losses from from Hurricane Dorian, which devastated parts of the Bahamas on September 1st 2019 as a category 5 storm, before going on to cause impacts in North Carolina, USA, on September 6th 2019 as a category 1 storm, then further north in Novia Scotia on September 7th 2019 as a post-tropical cyclone.
Currently estimates suggest that hurricane Dorian could cause an insurance and reinsurance industry loss of up to $8.5 billion, which could be sufficient for some minor losses to be experienced in retrocessional ILS or collateralised reinsurance layers.
Markel CATCo also warns investors in both shareclasses of its listed fund that they could also have exposure to potential losses from Typhoon Faxai, which made landfall east of Tokyo on September 9th 2019 as a category 2 storm.
Industry loss estimates for Typhoon Faxai suggest a loss of up to $7 billion currently, but after the experience of loss creep with Jebi the market is expected to be very cautious when setting its reserves for this storm.
Markel CATCo noted that “Significant uncertainty remains with respect to the overall private insurance industry loss impact for these events.”
The company said that it will assess the combined effect of these recent storms and the need to include any specific additional loss reserves for Hurricane Dorian and Typhoon Faxai.