Shares have been redeemed in the public and stock exchange listed CATCo Reinsurance Opportunities Fund, as investors in the strategy finally get to realise the remaining value and exit the retrocessional reinsurance investment strategy.
The exit point, through a buy-out of all shares in the CATCo retro reinsurance fund strategies, was only possible after the negotiation and funding support given by parent Markel CATCo.
The buy-out scheme officially closed on March 28th, with distributions of value from the private CATCo insurance-linked securities (ILS) funds then beginning.
Today, the public and listed CATCo Reinsurance Opportunities Fund announced that yesterday it effected a partial compulsory redemption of shares, buying back the vast majority of holdings in the fund.
147,812,056 Ordinary Shares were redeemed from investors at a rate of USD 0.349957 per Ordinary Share and 82,398,091 C Shares were redeemed at a rate of USD 0.653616 per C Share.
It’s not quite the entire fund, as 1,493,131 Ordinary Shares and 832,376 C Shares now remain in issue.
In total, 99% of the issued share capital of the listed CATCo retro reinsurance investment fund was redeemed, with capital proceeds of the buy-out now set to be returned to investors in the strategy on April 11th.
Investors have effectively been locked-in to the CATCo retro strategies for some time now, with the negotiations over the buy-out itself having taken months.
Markel proposed a buy-out that it provided funding for back in September 2021, with the idea being to speed a resolution and return of capital to shareholders, allowing the parent to focus on running-off the retro reinsurance portfolios.
Now, with the buy-out almost completed and distributions of value set to be returned to investors next week, the process is nearly over and Markel can concentrate on extracting as much value out of the run-off process as possible, with any upside set to be shared with the CATCo investor base as well.
As we said before, the share price NAV the buy-out has been implemented at represents an almost 145% increase in value since the lows for the Ordinary share class and 241% for the C share class, a significant recovery in valuation and of shareholders invested capital.
In addition, the threat of any future litigation was removed thanks to necessary court approvals and bankruptcy support being received, meaning Markel can move forwards and put the CATCo venture behind it.