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Markel to buy out Catco

Tony Belisle: Catco Investment Management CEO

Bermuda’s Catco Investment Management Ltd is to be acquired by US financial holding company Markel Corporation.

Markel will acquire “substantially all of the assets of Catco”, according to a joint statement from the two companies. The deal is expected to close in the fourth quarter of this year, subject to conditions.

Two years ago, Markel acquired Bermuda insurer Alterra Capital in a $3.1 billion deal.

Financial details and terms relating to the Catco deal have not been disclosed. However, there will be no changes to the Catco team, which will continue operating in Bermuda under the new name of Markel Catco Investment Management, led by chief executive officer Tony Belisle.

Catco has its headquarters on the top floor of the ten-storey office building at 141 Front Street, while the head offices of Markel Global Insurance and Markel Global Reinsurance Corporation are located in Markel House, at 2 Front Street. Markel Corporation has its headquarters in Virginia.

Mr Belisle said: “We are excited to join forces with Markel, a leading global speciality insurer and reinsurer which operates with a strong commitment to its core values and distinguished corporate culture.

“We felt this partnership offered a rare opportunity for Catco to combine with a culturally similar organisation which shares our results-oriented commitment to success and market leadership.

“We are confident that uniting the strength of the Markel brand and its global reach with Catco’s differentiated product innovation capabilities will serve to improve our value proposition for investors and cedants.”

Mr Belisle added: “Catco has grown significantly since its launch in 2010, and the agreement with Markel will allow the same management team to maintain its commitment to both client service and continual product innovation.”

Catco manages about $2.7 billion of retrocession and traditional reinsurance portfolios.

Markel primarily markets and underwrites specialty insurance products. It also has market venture investments in a number of companies, which has resulted in it sometimes being referred to as “baby-Berkshire”, in reference to Warren Buffett’s conglomerate Berkshire Hathaway.

Commenting on the Catco deal, Markel’s president and co-chief operating officer, Richard Whitt, said: “We are very pleased for Tony Belisle and the entire Catco team to join Markel. The addition of Catco’s insurance-linked investment management capabilities alongside Markel’s traditional reinsurance capabilities makes for a powerful combination.

“While Markel has a long and successful track record in the insurance linked securities space, the addition of the Catco team takes our capabilities to an entirely new level.

“The current challenges in the reinsurance and retrocessional markets are well documented. Despite these short-term challenges, we believe that with innovative products and services the long-term future is bright.”

<p>Deal hotspot: 141 Front Street</p>

Markel Corporation’s move to acquire Catco is the third major mergers and acquisitions deal announced in the past few months involving businesses with offices at 141 Front Street, one of Bermuda’s flagship financial buildings.

The ten-storey office complex opened in 2010. Among companies with an office presence there is insurer Ironshore, which is in the process of being acquired by Shanghai-based Fosun International Ltd in a $1.84 billion deal announced in May.

And earlier this week Japan’s Mitsui Sumitomo Insurance Company, a unit of Tokyo-based MS&AD Insurance Group Holdings, announced it was acquiring Lloyd’s of London insurer Amlin in a $5.3 billion deal. Amlin also has an office at 141 Front Street.