Catco Reinsurance Opport... Share Discussion Threads

[topvest] 22/11/2018 18:12

Yes, what a disaster this stock has been. They seem to be on the wrong end of multiple 1 in 200 year events! I’m starting to get to the conclusion that their risk modelling is poor.

[danieldruff2] 22/11/2018 18:03

Said it before - this share is like taking a losing bet against global warming. I've long thought that the time when climate change is taken seriously will be when it becomes prohibitive to insure anything against large scale weather-related events, and houses along coastlines become uninsurable.

Bearing in mind the world population is set to double this century, and those enjoying a western lifestyle set to quintuple, that's a lot of assets and infrastructure in harm's way, doubt the insurance industry can match it with a working model as time goes by.

[spectoacc] 22/11/2018 07:35

Posts 217-219 above.

At least the Ord shares got 7 years of good returns before getting tonked! The C's aren't even getting to enjoy that.


22 November 2018

To: SFS, London Stock Exchange and Bermuda Stock Exchange

NET ASSET VALUE ("NAV") AND PORTFOLIO UPDATE

Markel CATCo Investment Management Ltd., as Investment Manager, announces the unaudited net asset value of the Company's Ordinary Shares and C Shares of $0.6969 and $1.0502 respectively, as at the close of business on 31 October 2018. The NAV is inclusive of an attritional loss reserve of approximately 15 bps per month (year-to-date: 1.5%).

The Company's Ordinary Shareholders and C Shareholders are exposed to potential losses arising from the 2018 events Hurricane Michael and Typhoon Jebi. The Manager has implemented a specific loss reserve for these events resulting in a 3.7% impact to the Ordinary Share NAV and 9.8% impact to the C Share NAV as of 31 October 2018. Information pertaining to the private insurance industry loss impact is still developing for these events and cedant loss notifications are not yet available, meaning reserves have been based on early industry estimates. As such, it is possible for the impact of these events to change materially following the availabilty of formal cedant loss notifications.

The Manager is also monitoring the California Widlfire events, notably the Camp and Woolsey (Malibu) fires, which began in early November. The fires have now become the most destructive in California's history. Based on early assessments of the industry loss potential due to the fires, it appears a material loss to the portfolio is likely in an amount that could exceed the impact of the 2017 California Wildfire events (2017: c.17%). The estimated impact to Ordinary Shareholders and C Shareholders will be determined after the fires are fully contained and further industry information has been made available.

In addition, the Company's Ordinary Shareholders continue to be exposed to losses arising from 2017 major events. Since the reserve provisions made in April 2018 for 2017 events, the insurance market has continued to report further loss deterioration. In addition, the industry loss estimates for the 2017 events have increased at least 9% over estimates reported in April 2018. As a result, further reserve strengthening is likely to be necessary. An assessment of Q3 cedant loss information is currently underway and an announcement of the estimated portfolio impact will be made prior to the release of the 30 November 2018 NAV.

[spectoacc] 12/11/2018 14:12

Bad fires in California eh - who'd bet against another "200 year event". Muppets.

[spectoacc] 26/9/2018 08:51

Those d buys (& a million shares of buyback) seem to have perked it back up. The buyback seems to imply there's nothing to report in terms of excess losses (yet, of course).

[jonwig] 24/9/2018 14:59

C shares are invested in current year events - I'd be surprised if they weren't involved. (Incidentally, I sold when Flo appeared.)

[alpal2] 24/9/2018 14:57

jonwig: ".. only one way forward for me." You're too kind nominating me to be a director.

But I did tell management each time they increased capital that logic says one can't deploy ever increasing amounts of capital without increasing the risk profile. And I did tell them "...told you so!" after the 2017 losses.

Management says it targets a 16% return but hasn't achieved this in many years even if I was soft enough to overlook the exceptional nature of losses in 2017.

[alpal2] 24/9/2018 14:48

Directors ought to have some idea of Florence losses or if covered by provisions.
Or at least include in NAV RNS a statement "….we haven't a clue...."

Do we know if C shares would be liable for share of 'Florence' losses?

[jonwig] 24/9/2018 14:43

alpal2 - I guess they learned a lesson from last year, when the insured losses were estimated, increased and again. Insurers tend to extrapolate from known history, not from a new extreme. They're just being cautious, I guess!

If you think the directors (managers, you mean?) haven't a clue, there's only one way forward for you!

[spectoacc] 24/9/2018 14:17

To be fair, they presumably won't know losses on storm Flo yet.

There was quite a bit of buying in the CAT ords (ie non-C) previously, but agree it's interesting that it's now switched back to the C's.

My hope is that they're comfortable with loss provisions in spite of storms, and hence are buyers. But fair point about their "once in 200 year" events that seem to come up rather too often.

[alpal2] 24/9/2018 13:53

Is it significant that the share buy-back and directors purchases have all been in "C" shares. The discount to disclosed NAV is greater on the ords so logic says they should have bought ords unless [as always] they know something we don't about undisclosed losses coming.

I thought the last RNS of NAV was pathetic as it made no mention of losses from storm Florence as an event subsequent to the NAV date.

The late disclosure of losses on 2017 storms shows the directors haven't a clue on the re-insurance business [other than how to increase their own management fees].

[spectoacc] 24/9/2018 13:26

A few director buys in the C's, inc 1m today at 98.75c. Always good to see - joined them & doubled holding.

[spectoacc] 19/9/2018 12:35

In for some C's for the first time, at mid, on £ being a little stronger & it "only" being one event. Not with enormous confidence I admit.

[riverman77] 12/9/2018 08:06

Sold out too. Surprised this has not dropped as it looks like a massive one. Safer to be out until it passes.

[jonwig] 11/9/2018 16:14

Spec - I think both would be exposed to 2018 events. I held CATC.

[spectoacc] 11/9/2018 15:20

Am out of CAT again now but surely the CATC's should be the ones getting knocked back, rather than CAT?

[jonwig] 11/9/2018 14:59

Florence looks bad, and it came as a surprise for me.

Sold.

[topvest] 17/8/2018 18:33

Did Buffett say this...I think not! Berkshire Hathaway didn’t lose their shirt.

[topvest] 17/8/2018 18:31

Yes, made me laugh as well. If they think last year was in 200 year event, then maybe they need to revisit their models. From a non-technical perspective felt more like 1 in 20 or 1 in 50 year event to me! Doesn’t help their credibility.

[jonwig] 17/8/2018 07:57

Yes, I spotted that, too. All this stuff is based on a Normal distribution model, but the tails are clearly getting fatter through climate change effects. The modellers haven't produced any new models to fit these, as there isn't the statistical data ove enough years.

There seems to be a consensus that 2018 will be quiet for US windstorms, as mid-Atlantic has been unusually cool. (Surprising!)

[spectoacc] 17/8/2018 07:20

You just can't make up comments like this:

"...It is important to keep the broader context of this truly significant loss year in mind. First, the modeled probability of a c. -40% annual performance was a c.1-in-200 year likelihood with respect to the 2017 portfolio. As the Investment Manager has significantly improved contract terms in 2018, this level of modeled loss is now expected to occur c. 1-in-700 years. "

2017 portfolio was down 41%, in case anyone needs reminding.

Reminded very much of the 2008 stockmarket falls bringing down the banks - "Six sigma event/ those falls wouldn't happen in our models even if the universe ran twice".

[jonwig] 20/7/2018 15:55

@ Divmad - only BCAI, which I think is planning to go into run-off despite not being hit so hard as CAT.

[divmad] 20/7/2018 14:48

Are there any other listed reinsurers that offer attractive valuations and yield, Jonwig? I'm new to this sector but interested in low market beta opportunities around, at very cheap valuations/large discounts to NAV.

[divmad] 20/7/2018 14:44

Thanks Jonwig.

I suppose the legacy claims are containable, or discounted, then, seeing as the Investment Manager has bought a tidy amount of both classes.

[jonwig] 20/7/2018 14:26

@ Divmad - different portfolio exposure! CAT is still exposed to unresolved claims from 2017 windstorms, etc. CATC is clean of such legacy things - new contracts only.