Pension Insurance Corp says to decline revised Markel CATCo buyout offer

Pension Insurance Corporation plc (PIC) has explained that it won’t accept the updated and improved buyout terms proposed to investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds, calling the proposal “fundamentally flawed”.

As a reminder Markel Corporation and Markel CATCo made an offer to buyout the remaining holdings in its retro reinsurance investment fund strategies back in September.

Pension Insurance Corporation plc (PIC) then said that it intended to try and put together an investor group to challenge Markel CATCo’s proposed buyout scheme, saying it believed it will “drastically undervalue the interests of investors.”

Following that, the buyout terms being offered by Markel CATCo were updated recently and made more favourable in response to investor feedback.

As we then explained, the updated terms mean that investors in the CATCo retro funds now stand to receive as much as 18.5% more in capital return, compared to the original offer that was made.

But this doesn’t actually satisfy the main concern that Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension schemes, has.

PIC said in a statement shared with Artemis that its opposition to the CATCo fund buyout proposal remains.

“PIC will not be accepting the new offer and will continue to oppose the proposed schemes,” a spokesperson said.

Adding that, “Markel’s attempts to cramdown investors are fundamentally flawed.”

A “cramdown” refers to an attempt to restructure into a form that creditors would be required to accept under a bankruptcy process. It seems PIC may still not agree with the updated valuations and return on capital proposed.

But perhaps more a driver for continuing to turn down the offer are the terms and the fact by signing up to them, investors would have to forego any future legal action.

PIC said, “Investors are being asked to release litigation claims without visibility on the value of those claims, or how this could possibly work in practice.”

In order to stop the buyout proposal going ahead it seems PIC will need to bring other investors to its way of thinking, hence the pension insurer had previously said it would try to bring together a group of investors to vote against it.

Markel CATCo said recently that investors representing more than 90% of the Markel CATCo Reinsurance Fund Ltd., the private fund startegy and investors representing over 95% of CATCo Reinsurance Opportunities Fund Ltd., the public and listed fund strategy, have either said they will support or indicated they will support the buyout transaction.