Markel secures investor backing for ‘improved’ CATCo buyout deal

Markel Corporation has secured investor backing for the proposed buyout transaction of its retrocessional reinsurance and ILS funds manager  Markel CATCo Investment Management, which will allow for the return of funds to investors.

The move will facilitate the firm’s existing plans to wind down after being in run-off for two years.

Affiliates of Markel will provide funding of up to approximately $150 million to buyout substantially all of the retrocessional segregated accounts of the funds and tail risk cover that will allow for the return of approximately $100 million of trapped collateral to investors in the Private Fund's separately structured reinsurance offering, known as the Aquilo Fund segregated account.

Furthermore, Markel has agreed certain improvements to the terms of the buyout transaction which will result in the buyout of all segregated accounts of the Funds (including the Aquilo Fund), plus an additional cash distribution to investors by way of an increased consent fee and other cash consideration provided by Markel Corporations and its affiliates.

The improved terms result in affiliates of Markel Corporation providing up to approximately $270 million for the full buyout of the Funds and cash consideration of approximately $75 million.

Under the improved terms of the buyout, investors in the Funds will still retain the right to receive any upside at the end of the applicable run-off period if currently held reserves exceed the amounts necessary to pay ultimate claims.

The affiliates of Markel Corporation financing the buyout expect to receive a return of all their funding in relation to the full buyout of the Funds by the end of the run-off periods.

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