Markel to wind down CatCo Re, launch new retrocessional ILS platform

Specialty insurer Markel Corporation intends to establish a new retrocessional insurance linked securities (ILS) fund platform ahead of the 2020 renewal period in Bermuda, comprised of a reinsurance company, fund entity and investment manager.

At the same time, the company has announced that it will cease accepting new investments in Markel CATCo Reinsurance Fund (MCRF) and will not write any new business going forward through Markel CATCo Re (MCRe).

Markel CATCo will commence the orderly run-off of MCRe's existing portfolio, which is expected to take approximately three years. As part of this run-off, MCRF will return capital to its investors, including the CATCo Reinsurance Opportunities Fund, as such capital becomes available, which will continue to be subject to side pockets.

The new platform is aims to allow Markel to expand on its current range of ILS capabilities. It will be overseen by Markel Global Reinsurance executives Jed Rhoads and Andrew "Barney" Barnard.

Initial product offerings are expected to include a property catastrophe retrocessional investment ahead of the 2020 renewal period. The fund is expected to offer cedants a suite of property retrocession products with the ability to have coverage provided either on a collateralized basis, written by the new reinsurance company, or on a rated paper basis written by Markel Corporation's existing Class 4 Bermuda-based licensed insurance company, Markel Bermuda, or a combination of both.

The company expects that investors in the new venture will benefit from the access to risk that Markel can offer, as well as its underwriting and analytical capabilities and position in the reinsurance market.

"Markel is tremendously optimistic about the future of the ILS market," said Richard Whitt, co-chief executive officer at Markel. "Over time we expect this new platform to broaden Markel's capabilities and provide institutional investors access to further opportunities in insurance risk, complementing our existing Nephila and State National operations."

"The 2020 Retro Fund is expected to provide investors with access to property catastrophe retrocession exposure via a single-entry point and platform, and we expect it will additionally present a convenient and compelling offering to both our cedants and brokers."

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