For the year ended 31 December 2016 CatCo Reinsurance Opportunities achieved a net return for shareholders of 8.12 percent for the ordinary shares and 7.27 percent for the C shares. This is despite the number of significant catastrophic events that occurred during the year, making 2016 the worst year for insured losses since 2012 (Source: Munich Re). The industry benchmark, the Eurekahedge ILS Advisors Index, returned 5.18%. An annual dividend of $0.07180 in respect of ordinary shares and $0.05795 in respect of the C shares was paid on 17 February 2017.
The costliest natural catastrophe of the year was the April earthquake in Kumamoto, Japan, which resulted in $5.9 billion of insured loss. While a significant event for the region, loss levels are expected to remain significantly below our coverage levels.
Hurricane Matthew, which impacted the Caribbean and Southeast United States, was the largest event to impact North America in 2016, with claims currently estimated at $3.8 billion. North America was also impacted by other extreme events, including the Fort McMurray wildfire which became the largest catastrophe to ever impact Canada with cumulative insured losses of approximately $2.9 billion.
Another significant earthquake event occurred in November in South Island, New Zealand, with current insured loss estimates of approximately $2 billion.
The most costly manmade disaster in 2016 was associated with the Jubilee oil field offshore energy loss off the coast of Ghana. Current estimates related to business interruption, joint hull and machinery losses for this event are in the range of $1.2 billion to $1.5 billion.
Side Pocket Investments
In 2014, Side Pocket Investments (“SPI’s”) were created as a result of U.S. severe convective storm events, amounting to approximately 3.5 percent of the NAV at the time. As at 31 December 2016, these SPI’s represented approximately 1.6 percent of the ordinary share NAV (31 December 2015: 1.5 percent).
In 2015, SPI’s were created principally as a result of the winter storms in the U.S. and Canada, the Tianjin explosion in China and the UK floods. In the first quarter of 2016, the manager was able to release the entire Side Pocket Investment and loss reserve in relation to the UK floods, resulting in a 1 percent appreciation in the ordinary share NAV. As at 31 December 2016, the remaining SPI’s represented approximately 3.2 percent of the Ordinary Share NAV (31 December 2015: 5.5 percent). The combined 2014 and 2015 SPI’s amount to 4.8 percent of the Ordinary Share NAV as at 31 December 2016.
SPI’s were also created for 2016 as a result of the Fort McMurray wildfire in Canada, the Jubilee oil field off the coast of Ghana, Hurricane Matthew in Southeast United States and the South Island earthquake in New Zealand. As at 31 December 2016, the SPI’s established in relation to the 2016 portfolio represented approximately 7.1 percent of both the ordinary and C share NAV’s. These 2016 SPI’s represent capital held by reinsurance counterparties in excess of the loss reserves and reflect the above average catastrophic events during the year.
The combined 2014, 2015 and 2016 SPI’s amount to 11.5 percent of the ordinary share NAV.
CAT / CATC : CatCo shrugs off disasters to make 8% return