CATCo Reinsurance Opps Fund Ltd Portfolio Update - Hurricane Sandy (0442Q)
November 01 2012 - 2:00AM
UK Regulatory
TIDMCAT
RNS Number : 0442Q
CATCo Reinsurance Opps Fund Ltd
01 November 2012
CATCo Reinsurance Opportunities Fund Ltd. ("the Company")
Portfolio Update - Hurricane Sandy
To: SFM, London Stock Date: 1 November 2012
Exchange and Bermuda
Stock Exchange
Hurricane Sandy, the largest Atlantic tropical system in
diameter on record is a late-season tropical cyclone that has
affected Jamaica, Cuba, the Bahamas, Haiti, the Dominican Republic
and the eastern seaboard of the United States, reaching from the
area south of the Great Lakes region of the United States to
Eastern Canada.
The 18(th) named tropical cyclone and 10th hurricane of the 2012
Atlantic hurricane season, Sandy developed from an elongated
tropical wave in the western Caribbean Sea on October 22 2012.
It became a tropical depression, quickly strengthened, and was
upgraded to a tropical storm six hours later. Sandy moved slowly
northward toward the Greater Antilles and gradually strengthened.
In this case, seas were ramped up by significant waves and
full-moon-powered high tides. Combined with drenching rains, this
triggered inland flooding as the hurricane merged with a winter
storm system.
Property Claim Services who investigate reported disasters and
determine the extent and type of damage, dates of occurrence, and
geographic areas affected, typically publishes a preliminary loss
estimate within 30 days of the date of loss and reaches a final
industry loss estimate figure within six months of the date of
loss.
The majority of the Company's US exposure is through Ultimate
Net Loss contracts ("UNLs") and therefore any losses that may be
suffered by the Company will be based on the actual losses of the
insured counterparties rather than industry loss triggers as is the
case for Industry Loss Warranty contracts ("ILWs"). UNL contracts
may well be settled sooner, or later, as compared to ILW contracts
depending on the result of discussions with the Company's
reinsurance counterparties which the Manager has already begun.
As noted above a significant proportion of the likely insured
losses will occur as a result of flood damage. Traditional
homeowners' insurance policies do not typically cover flooding and
the majority of potential insured flooding losses to which the
Company is exposed will only relate to automobiles and commercial
properties (including business interruption).
Whilst it is too early for the industry, and indeed CATCo
Investment Management Ltd, to confirm a definitive magnitude of
retrocessional insured loss, early estimates from risk modelling
firms EQECAT and AIR Worldwide suggest that maximum economic losses
range from US$10bn to US$20bn. Within this range the insured losses
are estimated by EQECAT and AIR Worldwide to be within US$5bn to
US$15bn. Only insured losses are relevant to the Company.
Based on this very preliminary insured loss range the impact on
the Company would be a reduction in 2012 returns of a minimal
amount, if anything, at the lower end of this insured loss range
and potentially 10-15 per cent. net at the upper end of this
insured loss range.
For illustrative purposes only if any single US wind event led
to complete losses (and presuming that no other event occurred),
then the hypothetical maximum reduction in 2012 returns would be 24
per cent. net (27 per cent. gross).
For further information, please contact:
Jason Bibb
CATCo Investment Management Ltd
Telephone: +1 (441) 531 2227
Email: jason.bibb@catcoim.com
David Benda / Hugh Jonathan
Numis Securities Limited
Telephone: +44 (0) 20 7260 1000
John Whiley
Prime Management Ltd
Tel: +1 (441) 295 0329
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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