The beleaguered Catco Reinsurance Opportunities Fund is set to enter run-off after its board completed a consultation with shareholders.
The announcement was made on Thursday after the London Stock Exchange closed and comes after a torrid three months for the platform.
Back in December, Markel Catco unveiled plans for a share buyback scheme within the listed Reinsurance Opportunities fund to try to manage its steep trading discount, as well as setting up a redemption share class to allow investors a way out.
The Reinsurance Opportunities’ board has now completed its consultation with shareholders and concluded that, if offered the choice, a majority of those with a stake in the operation would elect to convert their shares into redemption shares.
“As a consequence, the board, having consulted with its advisers, has determined to recommend an orderly run-off of the company's portfolios in place of the restructuring,” Catco Reinsurance Opportunities Fund’s board said in a statement.
“A circular has been published to provide information relating to the proposed run-offs,” it added.
The approvals will be sought at separate class meetings which will be held on 26 March.
News that regulators were investigating the accounting of Bermuda-based ILS specialist Markel Catco’s loss reserves sent waves through the industry last December.
At the time, Markel said it was “fully cooperating with inquiries by US and Bermuda authorities into loss reserves recorded in late 2017 and early 2018 at Markel Catco Investment Management Ltd and its subsidiaries”.
The inquiries were received from authorities on 30 November, 2018.
Since then, it has become increasingly clear that Catco’s losses have substantially exceeded investors’ expectations, as highlighted by Liberum analysts in late December.
The Catco waters were muddied further when CEO Anthony Belisle and the CEO of the Bermuda operation Alissa Fredricks abruptly left the business after Markel “discovered violations…relating to an undisclosed personal relationship”.
The discovery into the apparent relationship between Belisle and Fredricks came after Markel engaged outside counsel to conduct an internal review relating to the governmental inquiries into the loss reserves recorded in late 2017 and early 2018 by Markel Catco Investment Management Ltd and its subsidiaries.
“During the course of the internal review, Markel discovered violations by Mr Belisle and Ms Fredricks of Markel policies relating to an undisclosed personal relationship, and prompt action was taken,” Markel said in a statement issued on Friday evening after the markets closed.