Markel gets the go-ahead for CATCo funds buy-out

The Markel CATCo Reinsurance Fund and CATCo Reinsurance Opportunities Fund, currently in run-off, are managed by Bermuda-based investment manager MCIM. Two lawsuits filed by investors against former Markel CATCo CEO Tony Belisle will be dismissed with prejudice at the time of closing of the buy-out transaction, expected to occur in late March 2022, according to Markel.

Up to $50 million funding for the buy-out of substantially all of the retrocessional segregated accounts will come from Markel Corporation affiliates. The buy will provide tail risk cover and allow for the return of trapped collateral to investors in the Aquilo Fund, a segregated account of the Private Fund.

Markel Corporation will also make payments to or for the benefit of investors in the funds, net of insurance proceeds, of approximately $100m.

In February, a Bermuda Court ordered meetings for fund investors to vote on the buy-out transaction. Those votes held on 4 March overwhelmingly backed it.

Under the terms of the deal, participants retain the right to receive any upside at the end of the applicable run-off period if Markel CATCo Re’s reserves exceed the ultimate claims. The Markel Corporation affiliates financing the transaction expect to receive a return of all their funding in relation to the full buy-out of the funds by the end of the run-off periods.