Still “up in the air” when Markel can raise new CATCo funds: Whitt, Co-CEO

Markel Corporation is still unsure when it will be able to begin raising new funds for future investment strategies operated by its Markel CATCo asset management unit, according to the firms Co-CEO Richard Whitt III.

Asked about the future of its retrocessional reinsurance focused investment fund manager Markel CATCo Investment Management yesterday during the Markel earnings call, Co-Chief Executive Officer of the corporation Richard R. Whitt, III said that was “up in the air.”

Whitt explained that Markel CATCo’s management team is working through the rolling-off of maturing contracts, as well as the resolving of side-pocketed investment exposures, all in order to return capital to investors as quickly as possible.

He said that June sees a number of contracts coming to maturity that Markel CATCo had underwritten, “We would expect some amount of cash to start to be returned to investors after those June deals roll off,” he explained, adding that money could be returned to investors from the autumn as a result.

Many investors had opted for a special redemption opportunity that Markel CATCo offered, to enable them to realise fully any losses and any remaining value in the current retrocessional reinsurance portfolio in the funds.

Once these contracts have matured and are unwound money will flow back to the Markel CATCo investor base and Whitt said the managers are working as hard as they can to finalise losses in side-pockets so that released capital can be returned as fast as possible.

“We’ll continue to work on that as the year progresses and try to move cash back to investors from the side pockets as quickly as possible,” he said.

Once that’s all dealt with Markel will look to the future of Markel CATCo it seems.

Markel has already said that it will look to adapt the Markel CATCo underwriting and investment strategy based on learnings from the catastrophe losses suffered in 2017 and 2018 and the ILS investment manager confirmed its commitment to its clients in delivering on its 2019 underwritten portfolio as well.

But it will still be some time before Markel CATCo can go out to raise new capital from interested investors it seems.

Whitt explained that after the rolling off of existing risk contracts and the redemptions are completed, “The thing that we’re working on is when will we be able to consider raising funds for future investment strategies?”

“That’s a little up in the air right now,” he said, adding “Because we’re still working with the government entities on the inquiry.”

It will be encouraging for investors that Whitt’s thoughts are turned to how to continue the Markel CATCo strategies and raise new capital to continue that offering in the retro reinsurance space. This will be encouraging too for those reinsurers that have been cedents and come to rely on the firms pillared product offering.

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