trapped collateral

The CATCo Reinsurance Opportunities Fund Ltd., the listed, retrocession focused insurance-linked securities (ILS) fund strategy managed by Markel CATCo Investment Management, has reported another increase in net asset value (NAV) after loss reserves saw more favourable development.

Deployable (or not trapped and available to put to work) capital in the insurance-linked securities (ILS) sector is estimated to have fallen to around $70 billion to $75 billion, according to analysts at KBW.

Capacity to support aggregate retrocessional reinsurance renewals at 1/1 is “extremely scarce” according to analysts at KBW, who after a second day of meetings with Bermudian companies concluded that significant rate increases are going to be required for this segment of the market.

As the proposal of a process to buyout investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds has been drawn out by legal appearances and is now waiting for a court decision to proceed, the investment manager has extended the expiry date of the support undertakings it received from investors.

Optimism over reinsurance renewal rate increases is said to be rising, as the market deals with a significantly delayed renewal timeline, for which a lack of aggregate retrocession capacity and trapped insurance-linked securities (ILS) capital are two of the drivers.

Progress in the buyout of investors in the Markel CATCo Investment Management retrocessional reinsurance investment funds is unlikely to be made until next year now, as the investment manager said a court decision is unlikely to come until January 22nd 2022.

Attitudes on pricing are generally seen as “bullish” as the January reinsurance renewals approach, with capacity availability and risk appetite seen as key factors, according to Head of Analytics at Howden unit HX, David Flandro.

Markel CATCo Investment Management acknowledged the delay to the buyout process for its retrocessional reinsurance investment funds this morning, but said that any challenges from investors would be vigorously defended against.

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.

Yesterday, a judge in the United States Bankruptcy Court for the Southern District of New York granted Markel CATCo’s petition for Chapter 15 bankruptcy recognition and relief for the proposed buyout process for the final winding down of the CATCo retrocessional reinsurance funds.