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Markel Catco evades H1 losses as return dips

Markel Catco escaped significant losses in the first half of the year to provide a 3.94 percent return for ordinary shareholders in the Catco Reinsurance Opportunities Fund, the company said in an interim financial report.

The H1 return fell below the 4.86 percent gain reported in the same period last year, but the fund remains on track to deliver its targeted net return of 9 to 12 percent above Libor rates.

While the US experienced an active severe weather season and Cyclone Debbie made landfall in Australia in March, the company has not set up any specific reserves for 2017 as the attritional loss reserve is expected to be sufficient to cover claims.

In the first half of the year Markel Catco Re paid claims of $65.9mn, predominantly in relation to the Jubilee oil field loss and Canada wildfire events last year, as well as $386,190 for severe convective storms in the US.

As previously reported, Markel commuted part of its exposure to the Jubilee oil field loss in June, which it said cost it the equivalent of 1 percent of net asset value (NAV).

However, favourable development on other loss reserves from 2016 events meant that there had been no overall material impact on NAV.

Its 2016 side-pocketed reserves for various events still amounted to 5.6 percent of NAV, down from 7.1 percent at year-end 2016. The remaining Jubilee reserve is equivalent to approximately 3.0 percent of NAV.

Markel Catco also has side pockets open for 2014 US storms worth 0.8 percent of NAV and for 2015 events connected to US and Canada storms worth 1.1 percent of NAV.

It bought further protection for its portfolio, mainly in the form of industry loss warranties, at prices similar to those of recent years, remarked chairman James Keyes.


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