TIDMCAT
RNS Number : 2016C
CATCo Reinsurance Opps Fund Ltd
15 January 2015
CATCo Reinsurance Opportunities Fund Ltd. ("the Company")
Portfolio Update
To: SFM, London Stock Date: 15 January 2015
Exchange and Bermuda
Stock Exchange
Highlights
-- FY14 net asset value ("NAV") growth of 14.08%
-- FY14 share price total return of 9.20%
-- FY14 share price growth of 4.04%
-- FY14 annual dividend declared of $0.05929 per share
-- Side pockets set up at 31 December 2014 amount to
approximately 3.5% of NAV but are not expecteded to result in loss
payments
-- Proposed Return of Value to Shareholders equivalent to $35
million in aggregate from profits generated during FY14
-- Increased demand for CATCo-Re Ltd (the "Reinsurer") products
has led to 100% of available capital deployed at 1 January 2015
-- CATCo Investment Management, Ltd (the "Manager") has
maintained a disciplined 2015 deployment which has yielded a
de-risked portfolio while still achieving in excess of the
Company's stated targeted gross investment return of LIBOR plus
12-15% per annum
-- FY15 portfolio provides for an indicative net return of 19%
-- 2015 average risk per pillar decreased to 3.3% (2014: 4.1%).
Helped by reduced cost of hedging the portfolio
FY14 Performance
Similar to 2013, CATCo again achieved positive capital gains
over the year to 31 December 2014 ("the period") resulting from a
well-diversified and balanced investment portfolio of global
risks.
Following US severe convective storm activity in 2014 the
Manager established small aggregate loss reserves during 2014
amounting to approximately 1% of NAV. The NAV appreciation for the
period was 14.08% ahead of the Eurekahedge Insurance Linked
Securities Advisors Index of 4.96%*
The Company has continued to pay an annual dividend representing
approximately LIBOR plus 5% of the net asset value of the Company
at 31 December each year.
On 5 January 2015 the Board of Directors declared the FY14
annual dividend of $0.05929 per share.
Side Pocket Investments ("SPIs")
The only remaining side pocket associated with calendar years
prior to 2014 is in relation to Super-storm Sandy which occurred in
late October of 2012. This SPI amounted to 2.8% of the net asset
value at 31 December 2014.
In accordance with the Reinsurer's contracts, the Reinsurer and
the reinsured counterparties must agree to commute the remaining
liability by no later than 31 December 2015. The Manager expects
that the release of liabilities related to Super-storm Sandy will
result in an enhancement to the indicative net returns for
2015.
Proposed Return of Value to Shareholders
With no significant insured losses incurred on the 2014
investment portfolio the Company concluded a successful year with
the net asset value benefitting from approximately 14 cents per
Ordinary Share of net insurance premiums earned over the full
year.
Consequently, the Company announced on 5 January 2015 that the
Directors propose to return US$35 million in aggregate, or
US$0.11528 per Existing Ordinary Share equating to approximately
10% of the Company's market capitalization as at 1 January 2015, by
way of the proposed Return of Value (Capital or Income
Distribution), or if the Return of Value is not approved by
Shareholders simply by way of a dividend.
The Return of Value is separate and in addition to the target
annual distribution of an amount equal to LIBOR plus 5% of the Net
Asset Value at the end of each Fiscal Year.
2015 Investment Portfolio Deployment
At the date of this announcement, the Investment Manager, on
behalf of the Reinsurer, has agreed terms on new 2015 reinsurance
transactions with multiple reinsurance counterparties that have
utilized 100% of the available capital received.
The Company and Master Fund's reinsurance portfolio contains a
significantly diverse set of global risk pillars. Indicative
annualized net returns for 2015, including retrocessional
protections, provide for a maximum, no-loss, return of 19%.
Furthermore, the average risk per pillar for 2015 has decreased to
3.3% versus 4.1% for 2014. In addition, the Master Fund's
diversified portfolio, including reinsurance protections, ensures
that exposure to a single loss event, no matter the magnitude of
the event, results in net portfolio returns for investors in the
current financial year of not worse than negative 10%.
* Eurekahedge Insurance Linked Securities Advisors Index is not
the Company's stated investment benchmark.
This information is based on research undertaken by CATCo. CATCo
Investment Management Limited may change its opinions and views
without prior notice. It does not constitute investment advice nor
is it an invitation to invest in this company. This is purely a
scenario analysis and not a forecast.
For further information, please contact:
Judith Wynne,
Company Secretary and General Counsel
CATCo Investment Management Limited
Telephone: +44 7986 205364
Email: judith.wynne@catcoim.com
Mark Way
Corporate Communications Director
CATCo Investment Management Limited
Telephone: +44 7786 116991
Email: mark.way@catcoim.com
David Benda / Hugh Jonathan
Numis Securities Limited
Telephone: +44 (0) 20 7260 1000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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