CatCo updates on Hurricane Harvey
Update 21 September 2017
The manager has published an NAV for 31 August 2017 of $1.2507. This includes a 6% reduction for the potential effect of Hurricane Harvey. Nothing has yet been accrued for Irma or Maria. The impact of Hurricane Irma will be assessed when setting the 30 September 2017 Net Asset Value.
They say that “The combined effect of these loss events is expected to have a meaningful impact on 2017’s portfolio returns with the potential to fully erode annual returns, or more, for 2017.”
The shares are now trading at $1.1156
Original statement 29 August 2017
Markel CATCo Investment Management Ltd., as Investment Manager of CatCo Reinsurance Opportunities, “would like to express their deep concern for the affected residents of Texas as they continue to experience one of the worst storms in US history. Whilst it is still very early to comment on the level of potential impact to the investment portfolio, the early estimates provided by the catastrophe risk modelling firms suggest insured wind losses of low single digit billions (USD).
Of course, the remaining question which cannot be answered at this time is with respect to the potential insured flood loss amounts. If the total wind and flood insured losses remain below $10 billion the impact on the investment portfolio is not expected to be significant.”
It is early days in terms of assessing the damage but Edward Morris and Michael Huttner, insurance analysts at JPMorgan Cazenove, said: “At this stage, it remains early to provide reliable loss estimates, but something in the $10bn to $20bn range appears likely, and could easily be exceeded given the extent of flood damage.”
CatCo’s share price is off by 4.9% on the news to $1.2745 which compares to its last published NAV of $1.2901 (as at close of business on 31 July 2017).