Markel Corporation and Markel CATCo Investment Management (MCIM) have announced that following the conclusion of the early consent deadline of Oct. 22, with respect to a buy-out transaction announced Sept. 27, they have received a substantial level of investor support for the transaction. Investors represent more than 90% of Markel CATCo Reinsurance Fund (the private fund), and more than 95% of CATCo Reinsurance Opportunities Fund (the public fund), returning support undertakings or otherwise indicating their intention to support the buy-out transaction.
The boards of both the private and public funds have resolved to proceed with the commencement of schemes of arrangement in Bermuda in order to implement the buy-out transaction, Markel said. The transaction will be facilitated by affiliates of Markel Corporation providing funding of up to $150 million to buy out substantially all of the retrocessional segregated accounts of the funds and tail risk cover that will allow the return of about $100 million of trapped collateral to investors in the private fund’s separately structured reinsurance offering, known as the Aquilo Fund segregated account.
Markel Corporation also announced that it has agreed to certain improvements to the terms of the transaction that will result in the buy-out of all segregated accounts of the finds, including the Aquilo Fund, plus an additional cash distribution to investors through an increased consent fee and other considerations provided by Markel and its affiliates. The improved terms mean that affiliates of Markel Corporation will provide up to $270 million for the full buy-out of the funds and cash consideration of about $75 million.
Under the improved terms, investors in the funds will still retain the right to receive any upside at the end of the applicable run-off period if currently held reserves exceed the amount needed to pay ultimate claims.