Catco Reinsurance Opport... Share Discussion Threads

[divmad] 20/7/2018 14:17

Why is there a differential between the Ordinary and C Ordinary Depositary Receipts here please?

[spectoacc] 19/7/2018 16:15

The (eventual) d buying has done it no harm, & weaker £ hasnt' hurt either. Not sure at what point I'm a seller again.

[jonwig] 05/7/2018 16:50

This article says: "The northern hemisphere has been hit by extreme heat over the past two weeks, with record-breaking temperatures recorded in the US, Canada, Europe and the Middle East."



An accompanying map shows also very high temperatures across north Africa.
Hurricanes begin as hot air over the mid-Atlantic and, although there's nothing in the article to say so, I'd have thought we're in the precursor of an active season - began on 1 June.

However, consensus suggests otherwise, "a quiet season":



More recent:

[spectoacc] 22/6/2018 14:41

Acquisition of Share Interests by CEO of Investment Manager

To: SFS, London Stock Exchange and Bermuda Stock Exchange

Tony Belisle, Chief Executive Officer of Markel CATCo Investment Management Ltd., the Company's Investment Manager, purchased 500,000 Depositary Interests in Ordinary Shares of the Company at $0.56 per share, on 21 June 2018.

During the period from 16 May 2018 to 21 June 2018, Mr Belisle has purchased, in total, 2,000,000 Depositary Interests in Ordinary Shares of the Company and 500,000 Depositary Interests in C Shares of the Company.

[spectoacc] 19/6/2018 06:49

Suggests yet another d/g to NAV possible I guess. I've not bought the C's, really want them at a discount!

[jimcar] 18/6/2018 14:38

Interesting he chose the C rather than the Ord at 20% discount to NAV

[jonwig] 18/6/2018 07:24

"Tony Belisle, Chief Executive Officer of Markel CATCo Investment Management Ltd., the Company's Investment Manager, purchased 500,000 Depositary Interests in C Shares of the Company at $1.01 per share, on 15 June 2018."

C-sh nav was $1.0309 at 31/05. Ord nav was $0.69.

[jonwig] 16/5/2018 08:06

@ Spec - 27% ought to be enough: maybe shows the suspicion surrounding this fund!

[spectoacc] 16/5/2018 07:27

Certainly anyone selling out in first half of 2017 would have done well - out at a price higher than bought at, plus c.75p of capital returns along the way. Reinsurance still feels like a "picking up pennies in front of a bulldozer" strategy tho, albeit that the new CATC ("let's start again") will be benefitting from the better rates - caused indirectly by CAT's huge losses!

NAVs much as expected today - the discount on CAT that got me in remains only as long as no more huge loss reserve provisions.

[jonwig] 15/5/2018 19:33

@ topvest - if you add back the dividends and at least two returns of capital, tsr up to August last year was pretty good. I don't want to make excuses for their over-exposure to Harvey, etc. which they ought to have hedged against.

[topvest] 15/5/2018 18:13

It’s not performed well at all. There’s no point having an attractive yield if they can’t preserve your capital.

[riverman77] 15/5/2018 16:46

Thanks for the insight on the sector - so effectively CAT is the reinsurer to the reinsurers. I agree that CAT had done very well until last year, although I wonder how much that was down to the very benign environment rather than any real skill. It seems rates have improved a bit which should at least help future returns.

[spectoacc] 15/5/2018 15:01

@jonwig - I did notice CAT declaring how investors had had 75% of their money back already in divis up to now. But the corollary of that is that at the now 50c share price, a buyer of CAT at issue has made all of 25% non-compounded if they sold out now! So actually pretty poor, and even worse if they'd reinvested the divis as scrip.

One other thing I noticed - before the latest CAT write-down, they'd said 35% was being reinvested into the new C shares. I'm guessing much of that is now off the table?

[jonwig] 15/5/2018 13:47

@ riverman - I think the point is that insurers lay off their excess to re-insurers, and then re-insurers do the same with the likes of CAT! So CAT ultimately protected the companies you mention. In fact, CAT produced excellent returns (dividend, return of capital) over its first seven years (end of 2010). The whole point of the company is to risk single big events against steady outsize returns.

However, this has failed because lack of cat events up to 2017 meant that non-specialists (pension funds, hedge funds) thought the returns were a free lunch and bid up the prices of cat-bonds and similar products, thus depressing returns.

Actually, holders here had a chance to exit. Look at the share price in Aug-Sept. A cautious investor could have gotten clear by reading the hurricane season newsfeed.

FWIW I sold at 112.3c on 20/09 and bought CATC at 102c on 22/12. So I was a bit slow to react, and will be sharper next time. (False sell signals could come, though!)

[riverman77] 15/5/2018 13:20

I am not an expert on the sector but losses seem pretty awful compared with the listed reinsurers, eg Lancashire took a more cautious approach and refused to chase risk last year given the unattractive pricing and losses were quite modest last year. Beazley and Hiscox also did very well although also operate in other parts of the market. However I have little in confidence in CATs approach to risk or ability to provide guidance on potential losses and will avoid this name altogether (and that includes the C shares).

[spectoacc] 15/5/2018 12:51

Have to agree - chump change. On the other hand - would they buy at all if they thought more big write-downs coming? I suspect there's more, but smaller. At which point the directors buy again, only larger :)

[hugepants] 15/5/2018 12:46

The level of director buying looks pathetically low.

[spectoacc] 14/5/2018 14:04

Aye, but they're not at a discount and who's to say they won't suffer the same as CAT as soon as the wind blows... ;)

[jonwig] 14/5/2018 14:00

@ Spec - the C shares ought to be safer - no legacy windstorm issues.

[spectoacc] 14/5/2018 13:23

Been watching these & finally punted a few but got to say the continued additional write-downs don't inspire confidence - and with the size of them, I doubt it's the end. Surely they should have kitchen-sinked to start with.

Some (pretty small) d buys given me sufficient confidence, but not in in much size yet.

[jonwig] 10/5/2018 06:32

@ topvest - perhaps percentages of different things? One is 8% of the whole portfolio, the other is an increase of 15% above what it was earlier assumed to be.

I don't really know ... though I should, if I'm an investor! (Anyway, I'll collect the dividends here until something nasty happens, and hope there's enough prior warning.)

[topvest] 09/5/2018 21:24

How does that work then given the exposure increased by 15% or so largely on one event?

[return_of_the_apeman] 09/5/2018 18:48

This probably helps a bit, as they can only pay out a finite amount for any one event

'The maximum capital exposed to a worst-case single event is limited to 8% for the 2018 portfolio, compared to 10% for the 2017 portfolio,' the reinsurer said.

[jonwig] 09/5/2018 09:27

@ erstwhile2 - agree it's complex, and I can't do more than quote from the March 2018 factsheet:

The Manager believes that the total loss reserves established for the 2017 loss events are sufficient to provide for all cedant claims with respect to these loss events, based on the information currently available. However, there is still some level of industry uncertainty with regards to the final insured loss impact of the 2017 loss events.

I'd have thought they would have hedging above certain loss levels, but I can't find evidence for that.