Markel CATCo targets price increases in US retrocession market

CATCo Reinsurance Opportunities Fund said on Oct. 2 that the board and Markel CATCo Investment Management, the company's investment manager, are proposing to raise further funds via the Markel CATCo Diversified Fund.

The move to raise funds aims to allow the company to take advantage of rate increases in the retrocessional reinsurance market.

Recent hurricane events affecting parts of the US and the Caribbean have resulted in increased pricing within the retrocessional reinsurance market and in addition a requirement by the company for new capital, according to a stock exchange filing.

The board and Markel CATCo believe that it is appropriate to offer this opportunity to investors in the company, in response to demand from both current shareholders and new investors. To facilitate this fundraise, it is intended that a prospectus will be published in early November with a view to closing the fundraise by the end of November. The fundraise will be by way of a placing of new C-Shares.

Whilst significant uncertainty regarding the market impact of the recent events exists, based on current loss estimates, and assuming no further significant catastrophic events for the remaining part of the year, the company currently estimates a net asset value (NAV) return for 2017 of between positive five percent to negative 15 percent.

Markel acquired the assets of specialist investment management business CATCo in 2015.

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