Markel CATCo Investment Management, the pending retrocessional reinsurance manager of Insurance-Linked Securities (ILS) funds, will be the subject of Chapter 15 bankruptcy proceedings as the primary owner of its A / S.
Chapter 15 bankruptcy proceedings are typically designed for an overseas company that has US financial interests or has US assets or business.
Bankruptcy filings provide an element of protection for those involved in the winding up of a business, such as Markel CATCo and its retrocessive reinsurance mutual funds, and reduce risk for creditors, which is the likely reason for filing as the manager wants to return capital as smoothly as possible to the remaining investors.
The filing describes the process that Markel CATCo and its funds will go through as part of the recently announced buyout.
With this proposal, Markel CATCo Investment Management and Markel Corporation sought to expedite the return of capital from the CATCo retrocession reinsurance mutual funds to investors while avoiding complications in the ongoing settlement of legal claims using capital to aid the process.
Bankruptcy protection will play a role in safeguarding the process and ultimately the assets of the funds for investors if the buyout process is approved.
The filing with the New York Southern Bankruptcy Court also provides some very interesting information about the major owners of the CATCo retro reinsurance mutual funds right now.
The filing must include an example of the corporate structure of the debtors, in this case Markel CATCo and their fund structures, as well as a list of all creditors who own 10% or more of the shares in any of the companies.
Markel CATCo Reinsurance Fund Ltd., the private and master fund part of the CATCo structure, has a particularly significant owner, the Danish pension fund manager PKA A / S.
PKA A / S (or Pensionskassernes Administration A / S) is the Danish pension fund administrator for the country’s labor market pension funds and thus manages investments in four predominantly health-related pensions.
PKA has been an investor in CATCo strategies since at least 2015, but some pension funds it manages are now 40% listed in Markel CATCo Reinsurance Fund Ltd., a particularly significant holding.
The bankruptcy filing does not reveal how large PKA’s stake is at 40%, but since the listed CATCo Reinsurance Opportunities Fund is only 12% owner of the private / master CATCo fund, it seems likely that PKA’s stake will always be Figure is still relatively important.
In our opinion, the Danish pension had its own mandate under the CATCo strategy, the CATCo PKA fund, which must be of an appropriate size so that the pension is now listed as a 40% holder in the main investment structure of the CATCo strategy.
The key holders of the listed strategy, the CATCo Reinsurance Opportunities Fund, are also listed, with the investment manager Weiss Asset Management holding 33.79% of the C shares and Almitas Capital holding 24.90% of the C shares.
Both also own common stocks in the publicly traded CATCo mutual fund, with Almitas Capital holding 20.65%, Weiss Asset Management 18.96%, Baillie Gifford 10.89% and Aberdeen Standard Investments 10.48%.
Only holders with a stake of 10% or more need to be disclosed in the bankruptcy petition.
Liquidation proceedings have been filed in Bermuda that are running in parallel with the bankruptcy agreements, while investors are being sought for assistance in the proposed buy-out transaction.
The bankruptcy process plays an important role in the process to protect investor interests in the United States and to provide the formal framework for the resolution of the offshore companies.