Catco Reinsurance Opport... Investors - CAT

Catco Reinsurance Opport... Investors - CAT

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Stock Name Stock Symbol Market Stock Type
Catco Reinsurance Opportunities Fund Limited CAT London Ordinary Share
  Price Change Price Change % Stock Price Last Trade
0.00 0.0% 0.265 08:00:23
Open Price Low Price High Price Close Price Previous Close
0.265 0.265 0.30 0.265 0.265
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Top Investor Posts

spectoacc: @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: @ 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!)
jonwig: @ 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.)
jonwig: Gilston - their portfolio update (see header) ended: Further, the catastrophic loss events of 2017 has led to higher pricing, generating a net no loss return of c. 23% for the 2018 portfolio versus 16% for the 2017 portfolio. Also, risk levels have been reduced in the 2018 portfolio. During the autumn of 2017, the Manager raised over USD 2.5 billion between its public and private funds. These new funds have now been fully deployed for 2018. And, from the Citywire article: ... an investor in the major fundraising in May 2011 would still have generated positive returns of 45%, or 6% per annum ... Maybe 23% is still insufficient compensation, but it's possible 2017 was a standalone event, since nothing remotely comparable has happened since 2006.
glawsiain: the special general meeting just passed the following motion (89% in favour): "Special General Meeting Your Board believes that it is important for the Company to take advantage of market opportunities and be able to raise additional capital, should there be an appropriate level of demand from both reinsurance buyers and potential new and existing investors. Following a recent change to the UK Prospectus Rules that enhances the ability of the Company to raise further capital without publishing a prospectus, the Company is seeking Shareholder approval at a Special General Meeting ("SGM") to permit it to issue further Ordinary Shares, up to a maximum of 20 per cent of the number of shares in issue at the date of the SGM, on a non-pre-emptive basis. The Company will continue to maintain its policy of only ever issuing shares at a premium to the prevailing NAV. Further information appears in the section "Capital Raising - Special General Meeting" in the Directors' Report, below. "
jonwig: "Requirement for new capital". A change from the usual demand from outside investors! And "the Company currently estimates a NAV return for 2017 of between positive five percent to negative 15 percent." Positive five would be a result! If I've calculated right (Jan 2017 baseline) the worst outcome would be closing NAV of $1.11 and probably a missed dividend. (Clever Mr Market?)
jonwig: Citywire: Income investors also snapped up the chance to buy shares in CatCo Reinsurance Opportunities (CAT). A tap share issue priced at 2% premium above its NAV at 30 April was designed to capitalise on ‘mid-year opportunities’ spotted by the manager Markel CatCo. It drew in $45.9 million (£35.7 million) which increases the fund’s market value to about $510 million (£362 million), according to the company’s broker Numis Securities. You don’t get much more ‘alternative’ than this London-listed company which invests in reinsurance contracts through a Bermuda-based ‘master fund’. It effectively uses investors’ capital to provide a back-up to the reinsurers that take on the big, catastrophe risks that everyday insurers don’t want to handle. Although there is a risk of a hurricane or earthquake wiping out 10% of the fund’s assets, in return CatCo receives a steady stream of premiums enabling it to target a dividend of 5% over dollar Libor, the US inter-banking lending rate. At $1.30, down 0.8% today, the shares stand at a 3% premium above their estimated net asset value (NAV), according to Morningstar, an improvement on last October when the stock traded at a 7% discount to NAV. They yield 5.5% and have delivered an annual 9.6% return since launch in December 2010, according to Numis.
jonwig: From Citywire: You don’t get much more alternative than catastrophe insurance, which is what the C shares in CATCo Reinsurance Opportunities (CATC) offer exposure to. The idea is that catastrophes are rare events and – if you get your underwriting right –can make good money taking in premiums in between shelling out for claims. This London-listed feeder for a Bermuda-based fund has been prominent in our first table for a few weeks. A note today from Numis Securities, the company’s broker, offers an explanation for why its shares have been out of favour, with their price falling to a 6.4% discount below net asset value (NAV) after the fund’s NAV took a 2.1% hit in December. The current discount compares to the average 0.4% premium above NAV that the stock has stood at in the past year, giving it a Z-score of -2.9. Just to recap, a Z-score is a measure used by analysts to determine whether an investment trust is trading significantly beyond its one-year range. Roughly speaking, a Z-score of -2 or below is ‘cheap’ while a score of 2 or more is ‘expensiveR17;. According to Numis, December is often a busy month for claims as companies wait for the year end to file their losses. Moreover, 2016 was beset with a large number of catastrophes such as the wildfires that plagued Canada in the summer, hurricane Matthew that hit South Carolina in October and the earthquake that struck New Zealand the following month. The fall in December means the NAV of the dollar-denominated C shares rose 7.3% last year, below its target return of Libor (the inter-bank lending rate currently at 1%) plus 9-12%. Numis says the portfolio has hit its target since its 2010 launch with a 9.7% annual return and reckons the shares are suitable for investors seeking returns unconnected to equity and bonds markets.
1337dg: I'd like to see how the Iris and BCGR perform for a while. That's in terms of price / NAV performance and also in terms of how they grow in size. BCGR might appeal due to it's sterling denomination, but it's only small and I'm always wary of being one of the first investors in a just launched fund. A friend sent me the below link, which has a nice one page summary of the 3 different investment trusts in the insurance linked sector (hopefully it's copied correctly)
jonwig: FT: So-called catastrophe bonds are catching the eyes of wealth managers and private investors searching for uncorrelated assets to diversify investment portfolios. These specialist bonds are issued by insurance and reinsurance companies and transfer some of the risk of natural catastrophes, such as a hurricane or an earthquake, to investors. Each "cat bond" is linked to the occurrence of a specified natural disaster, such as a certain strength of earthquake or a specific region that might be hit. Payout of some or all of the cash to the insurer only occurs if all of the specific conditions are met. The benefits of these products are that they pay investors a high regular income. Cat bond funds can yield as much as 8 per cent per annum after charges. The risks are that you might lose some or all of your initial investment. Private investors can gain exposure to cat bonds through two specialist reinsurance funds listed on the London Stock Exchange: CatCo Reinsurance Opportunities and DCG Iris, which is managed by Credit Suisse. Yields are about 5 per cent. Thomas Becket, chief investment officer at Psigma Investment Management, also likes the GAM FCM Catastrophe Bond fund, run by Fermat Capital. "Catastrophe bonds are one of the most attractive risk/reward opportunities that we can currently find in financial markets. We like the fact that this investment effectively has no exposure to credit risk and low exposure to both interest rate risk and financial market risk," says Becket. I see a director bought 6,000 [CORRECTED: 86,000 SHARES] shares on the 14th.
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