CatCo attracts another $125m to cap strong growth in first year

  • Attractive to investors: Pictured (from left) are CatCo's management team of CFO Jason Bibb, CEO Tony Belisle and CUO Graham Wood

    Attractive to investors: Pictured (from left) are CatCo's management team of CFO Jason Bibb, CEO Tony Belisle and CUO Graham Wood


The Bermuda-based firm, which manages a range of insurance-based diversified products, said the placing commitments from institutional investors took the total raised by CatCo since its December 2010 formation is now up to $338 million.

New ‘C’ shares will be issued by the company’s CatCo Reinsurance Opportunities Fund in relation to the new capital, which trades on the London Stock Exchange’s Specialist Fund Market and the Bermuda Stock Exchange (BSX).

The publicly traded fund is effectively a feeder fund into the CatCo Diversified Fund, a larger open-ended fund for private investors, which provides the capital for CatCo Re, a class 3 Bermuda reinsurer to write fully collateralised reinsurance contracts.

CatCo’s statement, published today, indicates that the Bermuda-based Diversified Fund has also raised more than $250 million in a capital raise.

CatCo’s chief financial officer Jason Bibb told The Royal Gazette that Diversified Fund’s assets are “around the $1 billion mark”.

The first year of operation for CatCo has been a rigorous test, given the series of catastrophic events that have hit many reinsurers hard. Mr Bibb said the only significant events in 2011 that had impacted CatCo’s portfolio were the second New Zealand earthquake and the Japanese earthquake and tsunami.

“For CatCo, it’s all about diversification,” Mr Bibb said. “We take an investment management approach. We look at risk a bit differently from how some of our counterparties might.

“We have aimed to build a diversified, global risk portfolio, rather than going where the pricing is, or where the concentration of risk is.”

The aim is to ensure that no one event could cause losses that would result in CatCo delivering negative returns to their investors.

The latest capital raise is the fourth this year for CatCo’s listed fund. Mr Bibb said it had been the biggest fund launch in the closed-end fund investment market in 2011. CatCo’s model is proving to be appealing to investors.

“It’s an uncorrelated asset class and it has performed well through a multitude of catastrophic events, compared to Lloyd’s syndicates and Bermuda companies,” Mr Bibb said.

The added certainty offered by collateralised reinsurance was attractive to buyers of retrocessional reinsurance, who were seeing it in a different light, particularly after this year’s string of catastrophes and the changes in asset management world that had stemmed from the global financial crisis.

CatCo said the C shares to be issued in relation to the $125 million of new capital will have a placing price which will be calculated as the net asset value per C share at the close of business on November 30, 2011, plus two percent.

The company expects that the new shares will be issued and admitted to trading on the LSE’s Specialist Fund Market and the BSX on December 16.

“This is the fourth fund raise that CatCo has successfully completed within 12 months and reflects the confidence institutional investors have in CatCo,” said Tony Belisle, CEO of CatCo Investment Management Ltd, the investment manager of the company.

“CatCo has proven its strength despite all of the catastrophes that have occurred around the globe over the last year. The ability to react quickly and take advantage of price changes in the reinsurance sector has both accelerated CatCo’s progress and demonstrated the strength and specialist knowledge of the team.”

CatCo chairman Anthony Taylor said: “ This recent fund raise will allow CatCo to continue to seek to capitalise on opportunities in the reinsurance sector and, as demonstrated by our dividend statement last week, continue to seek attractive shareholder returns.”

While Mr Bibb admitted having no way of predicting how catastrophic events might affect the company in 2012, he ventured: “Based on what we have done this year, the future looks bright for CatCo.”

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Published Nov 22, 2011 at 8:29 am (Updated Nov 22, 2011 at 8:26 am)

CatCo attracts another $125m to cap strong growth in first year

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