TIDMCAT
RNS Number : 7985L
CATCo Reinsurance Opps Fund Ltd
15 August 2013
15 August 2013
CATCo Reinsurance Opportunities Fund Ltd. ("the Fund")
Interim Financial Report
For the six months ended 30 June 2013
To: Specialist Fund Market, London Stock Exchange and Bermuda
Stock Exchange
CATCo Reinsurance Opportunities Fund Ltd. provides its
shareholders the opportunity to participate in the returns from
investments linked to catastrophe reinsurance risks, principally by
investing in fully collateralised reinsurance contracts and also
via a variety of insurance-based investments.
CHAIRMAN'S STATEMENT
Financial Performance
The net asset value capital return for the first six months of
2013 was 7.90%. The share price capital return was 3.74%, compared
to the insurance-linked securities ("ILS") benchmark total return
of 3.47%. The NAV Total Returns Since Inception of Shares to 30
June 2013 of the Ordinary Shares issued on 20 December 2010, C
Shares issued on 20 May 2011 and C Shares issued on 16 December
2011 respectively were 10.50%, 28.94% and 15.87%. In addition,
there was a positive foreign exchange attribution for sterling
investors which amounted to a further 6.81% capital return for the
period.
Dividend
Following Shareholder approval at the Company Annual General
Meeting held on 20 March 2013, the Board of Directors confirmed a
final dividend of $0.05006 in respect of the Ordinary Shares which
was paid to Shareholders on 27 March 2013.
Review
Since 1 January 2013, through a disciplined Board approved
underwriting plan and process, the Managers have created a 2013
investment portfolio that has been de-risked year on year. With
increased geographic exposures and risk pillars compared to
previous years the investment portfolio, subject to no losses
throughout the current year, has an expected net return to
investors of 28%.
According to Guy Carpenter, one of the largest reinsurance
brokers in the world, the "CATCo" products have generated a c.20%
market share of the retrocessional sector, and have a clear brand
recognition within the market place. This is very satisfying amidst
a changeable retrocessional environment, and in only three years of
existence.
During the period there was continued interest in the
catastrophe reinsurance sectors from institutional investors,
driven by low expected returns in corporate and government bond
markets. As a consequence, institutional investors, pension funds,
family office trusts, endowments and life insurers continued to
allocate additional capital to ILS and collateralised reinsurance
ahead of the June and July reinsurance renewals, in order to gain
exposure to a new uncorrelated alternative asset class. ILS pricing
for certain types of products and reinsurance renewals have
therefore fallen significantly, in some cases by 25-35%, due to an
oversupply of capital in the sector.
For buyers of reinsurance, this broader access to ILS and
collateralised markets, along with stronger support from
traditional reinsurers, has provided them with the ability to
manage their catastrophe risks at multiple year terms inside their
cost of equity capital.
However, in respect to the buying of retrocessional reinsurance,
the picture has been less acute. In this specialist sector of
reinsurance, it is the strength of relationships and continuity
which remain so highly valued by cedants. The market reputation for
CATCo's products has meant that this recent oversupply of capital
in the sector has had little or no effect on CATCo-Re Ltd, the
Company's reinsurance company, or its ability to retain or win new
business..
2013 Catastrophe Activity
Following two years of above-average catastrophe loss activity,
2013's global insured losses to date are below the last ten-year
average. Catastrophe events have resulted in approximately USD20
billion insured losses for 2013 compared to a half-year average of
approximately USD22.8 billion over the prior ten years.
During the period, there have been two notable catastrophic
events: the Oklahoma tornados in the US; and the South Eastern
European floods, which both occurred in May 2013. At the date of
this report, based on the counterparty information available,
neither event has had any impact to the Company's current
portfolio.
Update on Historical Catastrophic Activity
The US loss information service PCS has kept its fourth loss
estimate for Superstorm Sandy stable at $18.75bn, which remains
short of the $20bn mark at which significant industry loss warranty
(ILW) capacity could be triggered.
However PCS, whose normal policy is to close files when it has
produced two consecutive stable loss estimates for a disaster, has
left its file on Superstorm Sandy open, in view of the unique
characteristics of the storm. The existing retrocessional
reinsurance loss reserve provision that is included in the
Company's Net Asset Value calculation is based on an insured
industry loss of $20 billion. The Board of Directors remains of the
opinion that there is no need to amend the existing retrocessional
reinsurance loss reserve provision that is currently in place.
Impact of Side Pocket Investments
The current retrocessional reinsurance side pocket exposure,
included in the Net Asset Value calculation, at 30 June 2013
equates to 7.34% of shareholder funds.
Regulatory Changes
During the period under review, the Board has reviewed carefully
the impact of current and impending regulatory changes. Notable
among these are the imminent application of FATCA rules in Bermuda
and the implementation of the European AIFM Directive.
In relation to the former, the Bermudan Government is in the
process of finalising a Model 2 Inter-Governmental Agreement with
the United States. It has also recently announced its commitment to
sign a similar agreement in relation to the wider G5 initiative on
multilateral automatic exchange, the impact of which the Company
will only be able fully to assess once finalised. However, the
Board believes that the impact of FATCA on mutual fund companies
such as CATCo should be manageable.
Regarding the latter, the deadline by which EU member states
were required to transpose the European AIFM Directive into
national law passed recently, and a co-operation agreement between
the Bermudan Government with Europe has only recently been signed
which allows the Company to continue to be marketed in the EU under
the existing applicable private placement regimes. The Board is
therefore currently assessing the implications for the Company but
is confident that any changes required can be made in a way which
minimises their impact on CATCo's operations.
Outlook
The Company's financial performance during the first half of the
year has been very satisfactory as we are approaching US hurricane
season.
To date, no global catastrophic events during 2013 have caused
the necessary levels of damage required to have an impact on the
portfolio. Assuming a hypothetical basis of no losses for the
second half of 2013, the Company is on course to deliver a
shareholder net return of 28%.
The 2013 portfolio demonstrates one of the Company's core
strengths; the quality and expertise of its management and
underwriting team. Combined with the Company's unique ability to
provide clients with the foundations for their annual
retrocessional reinsurance needs, this proves that CATCo continues
to be a valued retrocessional partner to many of the industry's
reinsurance companies.
The Board strongly believes that offering tailor-made
reinsurance solutions to meet clients' needs enables the Company
both to continue to perform strongly and to consolidate further its
position in the retrocessional reinsurance market.
Nigel Barton
Chairman
15 August 2013
DIRECTORS' REPORT
Risks and Uncertainties
The Board of Directors has identified a number of key risks that
affect the Company's business. The principal risks are:
Reinsurance Risk
The objective of the Company and of the Master Fund is to give
its Shareholders the opportunity to participate in the returns from
investments linked to catastrophe reinsurance risks, principally by
investing in fully collateralised Reinsurance Agreements accessed
by investments in preferred shares of the Reinsurer, CATCo-Re Ltd.
The Master Fund spreads investment risk by seeking exposure to
multiple non-correlated risk categories so as to endeavour to limit
the amount of capital at risk with respect to a single catastrophic
event. The Company's Annual Report 2012, at page 17, explains in
detail how the Company and the Master Fund ensure that appropriate
diversification is achieved.
Risks related to the Company's investment activities
These risks include market price, interest rate, liquidity and
credit risk. Such key risks relating to investment and strategy
including, for example, inappropriate asset allocation or borrowing
are managed through investment policy guidelines and restrictions,
and by the process of oversight at each Board meeting outlined
above. Operational disruption, accounting and legal risks are also
covered annually, and regulatory compliance is reviewed at each
Board meeting.
In the view of the Board, there have not been any changes to the
fundamental nature of these risks since the previous report and
these principal risks and uncertainties are equally applicable to
the remaining six months of the financial year as they were to the
six months under review.
Related Party Disclosure and Transactions with the Investment
Manager
The Investment Manager is regarded as a related party and
details of the management fees payable are set out in the unaudited
Statement of Operations and note 6.
Going Concern Status
The Company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's statement.
In accordance with the Financial Reporting Council's guidance on
going concern and liquidity risk issued in October 2009, the Board
of Directors have undertaken a rigorous review of the Company's
ability to continue as a going concern.
The Company's assets consist of cash and a diverse portfolio of
retrocessional reinsurance investments which, in most
circumstances, are fully liquid at the end of their contractual
term. The Board of Directors have reviewed forecasts and they
believe that the Company has adequate financial resources to
continue its operational existence for the foreseeable future.
Accordingly, the Directors continue to adopt the going concern
basis in preparing these accounts.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Half-Yearly
Financial Report in accordance with applicable law and regulations.
The Directors confirm that, to the best of their knowledge:
1. The condensed set of financial statements contained within
the Half-Yearly Financial Report has been prepared in accordance
with the applicable accounting standards.
2. The Chairman's Statement, the Financial Highlights and the
notes to the unaudited financial statements provide a fair review
of the information required by rule 4.2.7R of the Disclosure and
Transparency Rules (being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of financial statements and a
description of the principal risks and uncertainties for the
remaining six months of the financial year) and rule 4.2.8R (being
related party transactions that have taken place during the first
six months of the financial year and that have materially affected
the financial position of the Company during that period; and any
changes in the related party transaction described in the last
annual report that could do so.)
The Half-Yearly Financial Report was approved by the Board on 15
August 2013 and the above responsibility statement was signed on
its behalf by the Chairman.
Nigel Barton
For and on behalf of the Board
15 August 2013
UNAUDITED STATEMENTS OF ASSETS AND LIABILITIES
(Expressed in United States 30 June 2013 30 June 2012 31 December
Dollars) 2012
$ $ $
------------- -------------- --------------
Assets
------------- -------------- --------------
Investment in CATCo Reinsurance
Fund Ltd.-
CATCo Diversified Fund, at
fair value 361,235,811 356,966,811 353,330,814
------------- -------------- --------------
Cash and cash equivalents 918,464 1,197,126 710,727
------------- -------------- --------------
Other assets 36,543 55,364 25,403
------------- -------------- --------------
Total assets 362,190,818 358,219,301 354,066,944
------------- -------------- --------------
Liabilities
------------- -------------- --------------
Accrued expenses and other
liabilities 154,368 295,922 253,439
------------- -------------- --------------
Management fee payable 1,001 1,196 603
------------- -------------- --------------
Total liabilities 155,369 297,118 254,042
------------- -------------- --------------
Net assets 362,035,449 357,922,183 353,812,902
------------- -------------- --------------
See accompanying notes
UNAUDITED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars) Six months Six months Year ended
to 30 June to 30 June 31 December
2013 2012 2012
$ $ $
-------------- --------------- --------------
Net investment loss allocated from
CATCo Reinsurance Fund Ltd. - CATCo
Diversified Fund
-------------- --------------- --------------
Interest 11,670 - 5,030
-------------- --------------- --------------
Performance fee (3,043,583) (1,708,594) -
-------------- --------------- --------------
Management fee (2,641,665) (2,602,795) (5,413,680)
-------------- --------------- --------------
Professional fees and other (155,352) (106,672) (241,542)
-------------- --------------- --------------
Administrative fee (113,597) (165,898) (340,305)
-------------- --------------- --------------
Miscellaneous expenses (17,778) (14,601) (24,415)
-------------- --------------- --------------
Total net investment loss allocated
from
CATCo Reinsurance Fund Ltd. - CATCo
Diversified Fund (5,960,305) (4,598,560) (6,014,912)
-------------- --------------- --------------
Company expenses
-------------- --------------- --------------
Professional fees and other (632,658) (321,638) (762,379)
-------------- --------------- --------------
Administrative fee (27,000) (27,000) (54,000)
-------------- --------------- --------------
Management fee (8,135) (8,358) (13,901)
-------------- --------------- --------------
Total Company expenses (667,793) (356,996) (830,280)
-------------- --------------- --------------
Net investment loss (6,628,098) (4,955,556) (6,845,192)
-------------- --------------- --------------
Net realised and net change in unrealised
gain on securities allocated from
CATCo Reinsurance Fund Ltd. - CATCo
Diversified Fund
-------------- --------------- --------------
Net realised gain on securities 17,581,186 19,425,984 18,490,351
-------------- --------------- --------------
Net change in unrealised gain on
securities 15,784,117 3,657,943 2,373,931
-------------- --------------- --------------
Net gain on investments 33,365,303 23,083,927 20,864,282
-------------- --------------- --------------
Net increase in net assets resulting
from operations 26,737,205 18,128,371 14,019,090
-------------- --------------- --------------
See accompanying notes
UNAUDITED STATEMENTS OF CHANGES IN NET ASSETS
(Expressed in United States Dollars) Six months to Six months Year ended
30 June 2013 to 30 June 31 December
2012 2012
$ $ $
-------------- ------------- --------------
Operations
-------------- ------------- --------------
Net investment loss (6,628,098) (4,955,556) (6,845,192)
-------------- ------------- --------------
Net realised gain on securities 17,581,186 19,425,984 18,490,351
-------------- ------------- --------------
Net change in unrealised gain on
securities 15,784,117 3,657,943 2,373,931
-------------- ------------- --------------
Net increase in net assets resulting
from operations 26,737,205 18,128,371 14,019,090
-------------- ------------- --------------
Capital share transactions
-------------- ------------- --------------
Dividend paid (18,514,658) - -
-------------- ------------- --------------
Transfer of Class 2 - C Shares - - (276,563,190)
-------------- ------------- --------------
Transfer to Class 1 - Ordinary
Shares - - 276,563,190
-------------- ------------- --------------
Net change in net assets resulting (18,514,658) - -
from capital share transactions
-------------- ------------- --------------
Net change in net assets 8,222,547 18,128,371 14,019,090
-------------- ------------- --------------
Net assets, beginning of period 353,812,902 339,793,812 339,793,812
-------------- ------------- --------------
Net assets, end of period 362,035,449 357,922,183 353,812,902
-------------- ------------- --------------
See accompanying notes
UNAUDITED STATEMENTS OF CASH FLOWS
(Expressed in United States Six months to Six months Year ended
Dollars) 30 June 2013 to 31 December
30 June 2012 2012
$ $ $
-------------- --------------- --------------
Cash flows from operating activities
-------------- --------------- --------------
Net increase in net assets
resulting from operations 26,737,205 18,128,371 14,019,090
-------------- --------------- --------------
Adjustments to reconcile net
increase in net assets resulting
from operations to net cash
provided by (used in) operating
activities:
-------------- --------------- --------------
Net investment loss, net realised
gain and net change in unrealised
gain on securities allocated
from CATCo Reinsurance Fund
Ltd. - CATCo Diversified Fund (27,404,998) (18,485,367) (14,849,370)
-------------- --------------- --------------
Changes in operating assets
and liabilities:
-------------- --------------- --------------
Sale (Purchase) of investment
in CATCo Reinsurance Fund Ltd.-
CATCo Diversified Fund 19,500,000 (110,500,000) (110,500,000)
-------------- --------------- --------------
Other assets (11,140) (48,104) (18,143)
-------------- --------------- --------------
Accrued expenses and other
liabilities (99,070) (160,936) (203,419)
-------------- --------------- --------------
Management fee payable 398 (70,988) (71,581)
-------------- --------------- --------------
Net cash provided by (used
in) operating activities 18,722,395 (111,137,024) (111,623,423)
-------------- --------------- --------------
Cash flows from financing activities
-------------- --------------- --------------
Proceeds from issuance of shares - - -
-------------- --------------- --------------
Dividends paid (18,514,658) (10,859,876) (10,859,876)
-------------- --------------- --------------
Offering costs - - -
-------------- --------------- --------------
Net cash used in financing
activities (18,514,658) (10,859,876) (10,859,876)
-------------- --------------- --------------
Net change in cash 207,737 (121,996,900) (122,483,299)
-------------- --------------- --------------
Cash, beginning of period 710,727 123,194,026 123,194,026
-------------- --------------- --------------
Cash, end of period 918,464 1,197,126 710,727
-------------- --------------- --------------
See accompanying notes
(Expressed in United States Dollars)
1. Nature of Operations and Summary of Significant Accounting
Policies
Nature of Operations
CATCo Reinsurance Opportunities Fund Ltd. (the "Company") is a
closed-ended fund, registered and incorporated as an exempted
mutual fund company in Bermuda on 30 November 2010 and commenced
operations on 20 December 2010. The Company was organised as a
feeder fund to invest substantially all of its assets in CATCo
Diversified Fund (the "Master Fund"). The Master Fund is a
segregated account of CATCo Reinsurance Fund Ltd. a mutual fund
company incorporated in Bermuda and registered as a segregated
account company under the Segregated Accounts Company Act 2000, as
amended (the "SAC Act"). The Master Fund will establish a separate
account for each class of shares comprised in each segregated
account (each, an "Account"). Each Account is a separate
individually managed pool of assets constituting, in effect, a
separate fund with its own investment objective and policies and
overseen by the Investment Manager. Pursuant to an investment
management agreement, the Company is managed by CATCo Investment
Management Ltd. (the "Investment Manager"). Refer to the Company's
prospectus for more information.
The Company's Shares are listed and traded on the Specialist
Fund Market ("SFM"), a market operated by the London Stock
Exchange. The Company's Shares are also listed on the Bermuda Stock
Exchange following the Secondary Listing on 20 May 2011.
The objective of the Master Fund is to give the shareholders the
opportunity to participate in the investment returns of various
insurance-based instruments, including preferred shares through
which the Master Fund would be exposed to reinsurance risk,
insurance-linked securities (such as notes, swaps and other
derivatives), and other financial instruments. All of the Master
Fund's exposure to reinsurance risk is obtained through its
investment (via preferred shares) in CATCo-Re Ltd. (the
"Reinsurer").
The Reinsurer is a Bermuda licensed Class 3 reinsurance company,
registered as a segregated accounts company under the SAC Act,
through which the Master Fund accesses all of its reinsurance risk
exposure. The Reinsurer will form a segregated account that
corresponds solely to the Master Fund's investment in the Reinsurer
with respect to each particular reinsurance agreement.
The Reinsurer focuses primarily on property catastrophe
insurance and may be exposed to losses arising from hurricanes,
earthquakes, typhoons, hailstorms, floods, tsunamis, tornados,
windstorms, extreme temperatures, aviation accidents, fires,
explosions, marine accidents and other perils.
Basis of Presentation
The unaudited financial statements are expressed in United
States dollars and have been prepared in conformity with accounting
principles generally accepted in the United States of America
("GAAP") as detailed in the Financial Accounting Standards Board's
Accounting Standards Codification.
Cash and Cash Equivalents
Cash and cash equivalents include short-term, highly liquid
investments, such as money market funds, that are readily
convertible to known amounts of cash and have original maturities
of three months or less.
Valuation of Investment in Master Fund
The Company records its investment in the Master Fund at fair
value based upon an estimate made by the Investment Manager, in
good faith and in consultation or coordination with the
Administrator where practicable, using what the Investment Manager
believes in its discretion are appropriate techniques consistent
with market practices for the relevant type of investment. Fair
valuation in this context depends on the facts and circumstances of
the particular investment, including but not limited to prevailing
market and other relevant conditions, and refers to the amount for
which a financial instrument could be exchanged between
knowledgeable, willing parties in an arm's length transaction. Fair
value is not the amount that an entity would receive or pay in a
forced transaction or involuntary transaction.
Financial Instruments
The fair values of the Company's assets and liabilities, which
qualify as financial instruments under ASC 825, Financial
Instruments, approximate the carrying amounts presented in the
statement of assets and liabilities.
Investment Transactions and Related Investment Income and
Expense
The Company records its proportionate share of the Master Fund's
income, expenses, and realised and changes in unrealised gains and
losses on a monthly basis. In addition, the Company incurs and
accrues its own income and expenses.
Investment transactions of the Master Fund are accounted for on
a trade-date basis. Realised gains or losses on the sale of
investments are calculated using the specific identification method
of accounting. Interest is recognised on the accrual basis.
Translation of Foreign Currency
Assets and liabilities denominated in foreign currencies are
translated into United States dollar amounts at the period-end
exchange rates. Transactions denominated in foreign currencies,
including purchases and sales of investments, and income and
expenses, are translated into United States dollar amounts on the
transaction date. Adjustments arising from foreign currency
transactions are reflected in the statement of operations.
The Company does not isolate the portion of the results of
operations arising from the effect of changes in foreign exchange
rates on investments from fluctuations arising from changes in
market prices of investments held. Such fluctuations are included
in net gain (loss) on investments in the statement of
operations.
Income Taxes
Under the laws of Bermuda, the Company is generally not subject
to income taxes, until 31 March 2035. However, certain United
States dividend income and interest income may be subject to a 30%
withholding tax. Further, certain United States dividend income may
be subject to a tax at prevailing treaty or standard withholding
rates with the applicable country or local jurisdiction.
The Company is required to determine whether its tax positions
are more likely than not to be sustained upon examination by the
applicable taxing authority, including resolution of any related
appeals or litigation processes, based on the technical merits of
the position. The tax benefit recognised is measured as the largest
amount of benefit that has a greater than fifty percent likelihood
of being realised upon ultimate settlement with the relevant taxing
authority. De-recognition of a tax benefit previously recognised
results in the Company recording a tax liability that reduces
ending net assets. Based on its analysis, the Company has
determined that it has not incurred any liability for unrecognised
tax benefits as of 30 June 2013. However, the Company's conclusions
may be subject to review and adjustment at a later date based on
factors including, but not limited to, on-going analyses of and
changes to tax laws, regulations and interpretations thereof.
The Company recognises interest and penalties related to
unrecognised tax benefits in interest expense and other expenses,
respectively. No interest expense or penalties have been recognised
as of and for the period ended 30 June 2013.
Generally, the Company is subject to income tax examinations by
major taxing authorities for all tax years since its inception.
The Company may be subject to potential examination by U.S.
federal or foreign jurisdiction authorities in the areas of income
taxes. These potential examinations may include questioning the
timing and amount of deductions, the nexus of income among various
tax jurisdictions and compliance with U.S. federal or foreign tax
laws.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the Company's management to make estimates and
assumptions that affect the amounts disclosed in the financial
statements and accompany notes. Actual results could differ from
those estimates.
Offering costs
The costs associated with each capital raise are expensed as
incurred.
2. Concentration of Credit Risk
In the normal course of business, the Company maintains its cash
balances in financial institutions, which at times may exceed
federally insured limits. The Company is subject to credit risk to
the extent any financial institution with which it conducts
business is unable to fulfill contractual obligations on its
behalf. Management monitors the financial condition of such
financial institutions and does not anticipate any losses from
these counterparties. At 30 June 2013 cash is held with HSBC Bank
Bermuda Ltd. which has a credit rating of A+.
3. Loss Reserves
The reserve for unpaid losses and loss expenses recorded by the
Reinsurer includes estimates for losses incurred but not reported
as well as losses pending settlement.
The Reinsurer makes a provision for losses on contracts only
when an event that is covered by the contract has occurred. When a
potential loss event has occurred, the Reinsurer obtains and uses
assessments from counterparties as a baseline, incorporating its
own models and historical data regarding loss development, to
determine the level of reserves required.
Future adjustments to the amounts recorded as of period-end,
resulting from the continual review process, as well as differences
between estimates and ultimate settlements, will be reflected in
the Reinsurer's statement of operations in future periods when such
adjustments become known. Future developments may result in losses
and loss expenses materially greater or less than the reserve
provided.
In the six months to 30 June 2013, the Reinsurer paid claims of
$36,270,377 pertaining to the Christchurch earthquake in February
2011 and Hurricane Sandy in October 2012.
4. Capital Share Transactions
As of 30 June 2013, the Company has authorised capital stock of
500,000,000 unclassified shares of par value $0.0001 per share.
The Company had an initial placing which closed on 20 December
2010 raising $80,392,000 through the issuance of 80,392,000
Ordinary Shares. On 31 March 2011 a further $7,358,750 was raised
through an additional issuance of 7,250,000 Ordinary Shares. The
Company had a further placing opening on 18 May 2011 resulting in
$124,446,737 being raised through the issuance of 124,446,737 C
Shares on 20 May 2011 and $850,000 being raised through the
issuance of 850,000 C Shares on 23 May 2011. A further $125,000,000
was raised through an additional issuance of 118,821,292 C Shares
on 16 December 2011.
As of 30 June 2013, the Company has issued 369,849,337 Class 1
Ordinary Shares.
Transactions in Shares during the period, and the Shares
outstanding and the net asset value ("NAV") per Share as of 30 June
2013 is as follows:
Beginning Shares Shares Ending
Shares Issued Redeemed Shares
-------------------- ------------ -------- ---------- ------------
Class 1 - Ordinary
shares 369,849,337 - - 369,849,337
Beginning Amounts Amounts Ending Ending NAV
Net Assets Issued Redeemed Net Assets Per Share
---------------------- -------------- ----------- ---------- ------------- -------------
Class 1 - Ordinary
shares $ 353,812,902 $ - $ - $362,035,449 $0.9789
The Company has been established as a closed-ended fund and, as
such, shareholders do not have the right to redeem their Shares.
The Shares are held in trust by Capita IRG Trustees Limited (the
"Depository") in accordance with the Depository Agreement between
the Company and the Depository. The Depository holds the Shares and
in turn issues depository interests in respect of the underlying
Shares which have the same rights and characteristics of the
Shares.
The Board of Directors of the Company (the "Board") has the
ability to issue C Shares during any period when the Master Fund
has designated one or more investments as "Side Pocket
Investments". This typically will happen if a covered or other
pre-determined event has recently occurred or seems likely to occur
under an Insurance- Linked Instrument. In such circumstances, only
those Shareholders on the date that the investment has been
designated as a Side Pocket Investment will participate in the
potential losses and premiums attributable to such Side Pocket
investment. Any shares issued when side pockets exist will be as C
Shares that will participate in all of the Master Fund's portfolio
other than in respect of potential losses and premiums attributable
to any Side Pocket Investments in existence at the time of issue.
If no Side Pocket Investments are in existence at the time of
proposed issue, it is expected that the Company will issue further
Ordinary Shares.
On 2 August 2012 the Board of the Company announced that it has
declared a distribution (the "Distribution") to Ordinary
Shareholders of any proceeds it receives in connection with that
part of its investment in the Master Fund which is exposed to
potential losses arising from the Master Fund's investment in
reinsurance contracts linked to the NZ and Japan Exposures.
The Distribution, if any, will be made to Ordinary Shareholders
on its register of members on 10 August 2012 (the "Record Date")
pro rata to the number of Ordinary Shares held on the Record Date,
as soon as practicable following receipt of any proceeds from the
Master Fund.
On 8 August 2012 the Board announced that the Master Fund in
which the Company invests has closed its side pocket associated
with the NZ and Japan Exposures. As described in the Prospectus,
this triggered the conversion of C Shares into Ordinary Shares. The
conversion of 244,118,029 C Shares into 282,207,337 Ordinary Shares
was effective close of business 10 August 2012 with the admission
for the new Ordinary shares effective 13 August 2012.
On 9 January 2013, the Board of Directors declared a final
dividend of $0.05006 in respect of the Ordinary Shares with a
record date of 18 January 2013. This final dividend was paid to
shareholders on 27 March 2013.
5. Investment Management Agreement
Pursuant to the Investment Management Agreement dated 16
December 2010, the Investment Manager is empowered to formulate the
overall investment strategy to be carried out by the Company and to
exercise full discretion in the management of the trading,
investment transactions and related borrowing activities of the
Company in order to implement such strategy.
6. Related Party Transactions
The Investment Manager of the Company is also the Investment
Manager of the Master Fund and the Reinsurer. The Investment
Manager is entitled to a management fee, calculated and payable
monthly in arrears equal to 1/12 of 1.5% of the net asset value of
the Company which is not attributable to the Company's investment
in the Master Fund Shares as at the last calendar day of each
calendar month. Performance fees are charged in the Master
Fund.
Qatar Insurance Company, an affiliate of the Investment Manager,
holds 7.44% of voting rights of the Ordinary Shares issued in the
Company. In addition, the Directors of the Company are also
Shareholders of the Company.
7. Administrative Fee
Prime Management Limited (the "Administrator") serves as the
Company's Administrator and performs certain administrative and
clerical services on behalf of the Company. For the provision of
the service under the Administration Agreement, the Administrator
receives a fixed fee.
8. Financial Highlights
Financial highlights for the Ordinary Shares for the period 1
January 2013 to 30 June 2013 are as follows:
Class 1
Ordinary Shares
United States Dollar
Per share operating performance
Net asset value, beginning of
period 0.9566
Offering costs -
Income (loss) from investment
operations:
Net investment loss (0.0205)
Net gain on investments 0.0929
Total from investment operations 0.0724
Premium -
Dividend (0.0501)
Net asset value, end of period 0.9789
Total net asset value return
Total net asset value return
before performance fee 8.42%
Performance fee* (0.86)%
Total net asset value return
after performance fee 7.56%
Ratio to average net assets
Expenses other than performance
fee (1.31)%
Performance fee* (0.87)%
Total expenses after performance
fee 2.18%
Net investment loss (2.15)%
The ratios to weighted average net assets are calculated for
each Class of Share taken as a whole. An individual shareholder's
return and ratios to weighted average net assets may vary from
these amounts based on the timing of capital transactions. Returns
and ratios shown above are for the period ended 30 June 2013 and
have not been annualised.
* The performance fee is charged in the Master Fund.
9. Indemnifications or Warranties
In the ordinary course of its business, the Company may enter
into contracts or agreements that contain indemnifications or
warranties. Future events could occur that lead to the execution of
these provisions against the Company. Based on its history and
experience, management believes that the likelihood of such an
event is remote.
10. Subsequent events
The unaudited financial statements were approved by management
and Board of Directors and available for issuance on 15 August
2013. Subsequent events have been evaluated through this date.
For further information, please
contact:
CATCo Investment Management Ltd
Jason Bibb, Director
Telephone: +1 441 531 2227
Email: jason.bibb@catcoim.com
Mark Way, Corporate Communications
Telephone: +44 7786 116991
Email: mark.way@catcoim.com
Numis Securities Limited
David Benda / Hugh Jonathan
Telephone: +44 (0) 20 7260 1000
Prime Management Ltd
John Whiley
Tel: +1 (441) 295 0329
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUCWRUPWGPA
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