Markel CatCo board recommends run-off as future in question

The future of  Markel CatCo looked less certain today as the company’s board said it would “recommend an orderly run-off” of the firm's portfolios.

Shareholders will be asked to vote on the recommendations for the retrocessional reinsurance investment specialist later this month.

The move follows a consultation to gauge support for proposals, made by the board last December, to restructure the company by inviting shareholders to convert their shares into redemption shares. It found that a large majority of shareholders would take up the opportunity.

In a statement, Markel CatCo said: “As a consequence, the board, having consulted with its advisers, has determined to recommend an orderly run-off of the company’s portfolios in place of the restructuring.

“The separate approval of the ordinary shareholders and C shareholders is required for the implementation of the run-off in respect of that share class (which constitutes a material change to the company’s investment policy in respect of each share class).”

It said that meetings to gain approvals would be held on 26 March 2019.

However, the statement added: “There can be no assurances in relation to the length of the run-offs as they are dependent on the underlying reinsurance contracts going ‘off risk’ and any related loss reserves being settled and collateral balances released (which is out of the company’s and the investment manager’s control).”

The future of the firm has been in question since an investigation into recorded loss reserves for late 2017 and early 2018 began last year.

However, the statement added that while the board has recommended the orderly run-offs, the company “may still seek to raise further capital in future, subject to demand and shareholder approval” But, it add: “If no further capital is raised, at or towards the end of the run-offs, it will become necessary to put the company into formal member’s voluntary liquidation.”

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