Markel announced buy-out for ILS funds


Markel announced buy-out for ILS funds

shutterstock/Pavel Kapysh

Markel has announced a buy-out to give an accelerated return for investors in two insurance-linked securities funds, the private Markel CATCo Reinsurance Fund and its public CATCo Reinsurance Opportunities Fund.

It has also filed applications with the Supreme Court of Bermuda for the appointment of joint provisional liquidators to implement the buy-out transaction. Markel Corporation will put up to $150 million in capital to fund the deal.

It follows claims by small investors in the retrocessional reinsurance investment funds, which have been in run-off since June 2019.

“The Buy-Out Transaction has been prompted as a result of threatened and asserted claims by two small investors that, although the Funds believe these claims to be meritless, have disrupted the continued timely and orderly return of additional capital to investors and is being offered to prevent the potential for inequitable treatment of some investors at the expense of all other investors,” the company said in a statement.

Under the arrangement, investors would receive almost all the available capital remaining: 100% of 2016 & 2017 side pockets, 90% of 2018 side pockets and 80% of 2019 side pockets.

An affiliate of Markel Corporation will also provide tail risk cover to allow for the return of approximately $100 million of trapped collateral to investors in the private fund’s separately structured reinsurance offering, the Aquilo Fund segregated account.

“The boards of directors of each of the private fund and public fund have unanimously determined that the buy-out transaction is in the best interests of each of their respective funds (taking into account the interests of their respective investors) and recommend that their investors return support undertakings by the early consent deadline,” Markel’s statement reads.

All investors in the funds have until October 22 to accept the buy-out transaction and be eligible to receive at closing a fee equal to 1% of the investor’s proportional entitlement to the current NAV.

Markel Corporation, Markel CATCo Reinsurance Fund, Buyout, ILS, Insurance, Reinsurance, North America

Bermuda Re