Catco Reinsurance Opport... Share Discussion Threads

[jonwig] 13/9/2017 14:27

Yes, possibly! Don't they subtract a monthly attrition of (?) 0.15% of NAV? One way for them would be to increase that to as much as 0.5% and then release it if possible at the year-end contracts expiry.

[jimcar] 13/9/2017 12:30

Yes the current price seems to reflect the lower end of the losses.

I wonder if we will go back to a premium to NAV. I think a lot of people liked the "uncorrelated to the market" idea but taking it as meaning not falling when the market falls, forgetting it can mean falling when the market rises!! If people now see this as being more risky then we could move to a discount. Any views?

[jonwig] 13/9/2017 11:05

Thanks Jim - but will future returns bump up enough to compensate for the greater risks?

[jimcar] 12/9/2017 15:31

Talks about CAT later in the article.

Numis estimating "losses" of 15 - 25% in total for both hurricanes

[jonwig] 11/9/2017 12:12

FT 15 mins ago:
BOSTON, Sept. 11, 2017 — Catastrophe modeling firm AIR Worldwide estimates industry insured losses in the United States resulting from Hurricane Irma will range from USD 20 billion to USD 40 billion. Note that these estimates are based on the NHC’s Sunday, September 10, 5:00 p.m. EDT forecast advisory for Irma. AIR Worldwide is a Verisk Analytics (Nasdaq:VRSK) business.

[Probably announced around 10:50 going by chart.]

[jonwig] 10/9/2017 16:52

JIM - thanks, helps clear things up a bit!

Of course the 'discount to NAV' is purely notional, and historic NAV is pretty useless for the present. End-August NAV will be published in the next week or so and, again, it might not be much use.

I read recently on Artemis.bm (see header) that CAT hedges its own worst scenarios, so who knows?

[jimcar] 10/9/2017 16:15

This seems to agree though adds 2% for Mexico earthquake.

[jonwig] 10/9/2017 15:08

Couple of things:

• Jose is expected to move east of the US coastline. Not certain to, of course!

• Assuming max 10% of NAV attrition on a single US windstorm event we could be at 20% loss to date - ie. 103p NAV post-event. (If I've read their comments correctly.) Looking at trades data for this stock, there have been decent size buys near the current price.

[jonwig] 08/9/2017 20:52

Comment on the 29/08 Harvey statement:

[jonwig] 08/9/2017 11:53

Stonesfan - the N. Atlantic hurricane season peaks around now (statistically 10 Sept, I'm told) but goes through to next month. Jose is following Irma, so there's still a queue of events!

I'd leave this alone for at least the rest of this month and until there are some actual numbers from CAT. The good news is that rates are likely to harden next year, so a better balance of risk vs. reward.

[Been away for a week with no decent net access. Not in the Windies, thankfully!]

[stonesfan] 07/9/2017 11:58

.. and one I'm glad I didn't take.

[stonesfan] 30/8/2017 10:05

Thanks, Jonwig. Still a gamble then.

[jonwig] 29/8/2017 14:42

Here's the initial announcement. Insured losses:

Markel CATCo Investment Management Ltd., as Investment Manager, would like to express their deep concern for the affected residents of Texas as they continue to experience one of the worst storms in US history. Whilst it is still very early to comment on the level of potential impact to the investment portfolio, the early estimates provided by the catastrophe risk modeling firms suggest insured wind losses of low single digit billions (USD).

Of course, the remaining question which cannot be answered at this time is with respect to the potential insured flood loss amounts. If the total wind and flood insured losses remain below $10 billion the impact on the investment portfolio is not expected to be significant.

Latest comment:

Estimated losses are expected to rise to $12 billion (£9.3 billion) although America’s National Flood Insurance Program is likely to absorb some.

Lloyd’s insurers have benefited from a benign claims environment in recent years although Harvey is unlikely to be a market-turning event, Peel Hunt’s Andreas van Embden said.

“We do not see this as being the size of a Katrina or Sandy,” he added.
[Evening Standard]

Latest estimate looks like $12.5bn.

[jonwig] 29/8/2017 11:03

Hi, Stones. They will probably not announce before they have a pretty certain answer, and (as from previous posts) current estimates vary wildly.

The opening 6c markdown represents a nav hit of about $23.5m, so we'll see how accurate that proves.

[stonesfan] 29/8/2017 10:28

I'm looking to get back in, Jonwig, but am afraid of the falling knife for now.

[jonwig] 28/8/2017 19:09

Estimates ever changing:

It appears that damages from Hurricane Harvey could end up near the higher end of estimates prior to the storm hitting land, but the insurance industry should still be able to manage the losses.

After making landfall on Friday near Corpus Christi, Texas, the Category 4 storm continues to bring catastrophic amounts of flooding to the state’s coast, including the Houston and Galveston area.

With more rain and flooding expected for another week, J.P. Morgan estimates that Harvey could result in US$10 billion to US$20 billion of losses for the insurance industry. That would make it one of the top 10 most costly hurricanes to hit the U.S.



Unlikely that CAT can produce anything definite tomorrow.

[jonwig] 26/8/2017 12:24

Cat 3 currently most likely, though cat 4 possible. Re contracts tend to be negligible at cat 2, and minor at cat 3. This time it could be different, with the high density of energy infrastructure in the way:





EDIT: now cat 1 (14:50 UK) but slow moving so still problems for Re.

[jonwig] 25/8/2017 20:14

Hurricane Harvey - oil supply disruption?

[jonwig] 31/5/2017 06:42

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.

[return_of_the_apeman] 14/2/2017 08:39

Buying opportunity for CATCo Reinsurance Opportunities

hxxps://masterinvestor.co.uk/funds-and-investment-trusts/64630/

[jonwig] 23/1/2017 07:46

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.

[jonwig] 20/1/2017 07:17

Year's update:

The Investment Manager recorded a loss reserve of c.1% of NAV in relation to Hurricane Matthew that impacted parts of the Caribbean before making landfall in South Carolina, U.S. on 8 October 2016.

A loss reserve of c.1% of NAV was also recorded in relation to the magnitude 7.8 earthquake that struck the South Island of New Zealand on 14 November 2016.

In addition, the Investment Manager increased its specific loss reserve for the Canadian Wildfires to a total of c.3% of NAV (c.1% was included in the June NAV). However, approximately 1% of the annual attritional loss reserve (c.2% per annum) was un-utilised, therefore this was reversed into the December NAV and partly offsets the afformentioned loss reserve increase.

Performance down compared with past two years. Not bad considering the range of events.
I'd guess a lower dividend, too. Maybe 5c?

[jonwig] 21/10/2016 14:31

Still early days!