Markel CATCo reserves for hurricane Michael, typhoon Jebi, warns over 2017 loss creep

Markel CATCo Investment Management has implemented a specific loss reserve to cover the 2018 events hurricane Michael and typhoon Jebi and has warned over potential California wildfire losses and a loss creep from 2017 nat cat events.

The reserves for hurricane Michael and typhoon Jebi losses resulted in a 3.7 percent impact to the ordinary share net asset value (NAV) and 9.8 percent impact to the C Share NAV as of 31 October 2018, the firm said in an update.

Markel CATCo Investment Management builds and manages portfolios that provide investors the opportunity to participate in the returns from a selected mix of investments linked to reinsurance risks accessed through its reinsurance company Markel CATCo Re.

The investment manager also warned over potential losses from the California wildfires, notably the Camp (Northern California) and Woolsey (Southern California) fires, which began in early November.

Based on early assessments of the industry loss potential due to the fires, it appears a material loss to the portfolio is likely in an amount that could exceed the impact of the 2017 California Wildfire events (2017: c.17 percent), the investment manager said. The estimated impact to ordinary shareholders and C shareholders will be determined after the fires are fully contained and further industry information has been made available, the document said.

In addition, the company is warning over a potential loss creep from the 2017 nat cat events.

The company's ordinary shareholders continue to be exposed to losses arising from 2017 major events, it said in the document. Since the reserve provisions made in April 2018 for 2017 events, the insurance market has continued to report further loss deterioration. In addition, the industry loss estimates for the 2017 events have increased at least 9 percent over estimates reported in April 2018. As a result, further reserve strengthening is likely to be necessary, the investment manager said. An assessment of third quarter cedant loss information is currently underway and an announcement of the estimated portfolio impact will be made prior to the release of the Nov. 30, 2018 NAV update, the company said.

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