CatCo seeks more capital to take advantage of rising rates

Bermuda-run CatCo Reinsurance Opportunities Fund Ltd believes it has sustained no losses through its reinsurance contracts from this year’s earthquakes in New Zealand and Japan that may have cost the industry more than $40 billion in claims.

The company said on Friday it is seeking to raise more capital through a C-share issuance to take advantage of reinsurance price increases of around 25 percent.

In a statement, CatCo said: “Following discussions with CatCo’s existing reinsurance counterparties where protections have been provided and are included in the existing portfolio, claim reserves held for the recent 2011 events in Australia, New Zealand and Japan are below the company’s reinsurance agreement loss event deductibles.

“Consequently, the board of directors currently do not believe that there are any potential losses to CATCo’s reinsurance portfolio resulting from recent events in these countries. CatCo’s reinsurance portfolio is also not exposed to any nuclear power related claims.”

The London-listed fund is run by CatCo Investment Management Ltd, which is based in the SE Pearman Building in Par-la-Ville Road, Hamilton.

The fund raised $80.4 million from institutional investors before it started trading last December and a further $7.35 million through the issuance of more ordinary shares last month.

It acts as a feeder fund for the larger Bermuda-based CatCo Diversified Fund, which provides capital for CatCo Re, a class 3 Bermuda reinsurer, to write fully collateralised reinsurance contracts.

“The reinsurance industry has experienced a number of significant events during the year to date,” a CatCo spokesman said. “The company has performed well and is now in an ideal position to take advantage of the consequent increase in rates.

“The strength of CatCo’s strategy and exposure to the reinsurance market has been tested and properly proven. The significant interest we have from investors is testament to the robust nature of our investment portfolio and we look forward to providing value to our shareholders.”

The C-share issuance will enable the company to write a May-June portfolio at premiums which are more than 25 percent higher than those achieved at January 1, the company added.

CatCo, whose backers include the Qatar Insurance Company, is headed by chief executive officer Tony Belisle, chief operating officer Jason Bibb and chief underwriting officer Graham Wood.

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Published Apr 11, 2011 at 8:46 am (Updated Apr 11, 2011 at 8:45 am)

CatCo seeks more capital to take advantage of rising rates

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