Former CATCo CEO Belisle’s fraud lawsuit stayed as settlement negotiated

A settlement is being negotiated between parties in a Florida fraud lawsuit lawsuit involving former CATCo CEO Tony Belisle, with the proceedings stayed until May to allow for the negotiations to continue.

Back in December we reported that former CATCo CEO Tony Belisle was involved in a lawsuit brought on behalf of HWH Realty Holdings LLC, an investment business owned by high-profile German billionaire and one of the co-founders of tech firm SAP, Hans-Werner Hector.

The lawsuit alleges that “seismic losses” suffered by the Markel CATCo retrocessional reinsurance funds in 2017 were far beyond where the risks attached to the strategies had been explained to investors in the funds.

The fraud lawsuit in Florida alleges Belisle misrepresented the risks of an investment in the Markel CATCo retro reinsurance investment strategy, causing the investor to suffer larger losses than had been anticipated, based on the CATCo fund’s marketing materials and messaging from the CEO.

The investor has claimed damages from former the Markel CATCo CEO, after losing nearly $20 million from its investment made in June 2017 into the CATCo retrocession fund.

We then reported in January that the lawsuit proceedings had been stayed, or put on hold, pending a Bermuda Supreme Court decision on the insolvency and winding-down of the Markel CATCo retrocessional reinsurance funds.

The winding down process has since made progress, with Markel sweetening the buy-out terms and reaching a settlement with some US investors.

But, in the meantime, the fraud lawsuit has moved towards a settlement negotiation, it seems and so the stay in proceedings has now been extended by mutual agreement of the parties involved.

The proceedings in the fraud lawsuit are now stayed through until May 19th 2022, with the parties ordered to update the court on their settlement negotiations, should any agreement be reached.

Court documents state, “The Parties are actively negotiating a global settlement to resolve this case and other pending litigation, and the Parties believe that there is an opportunity to reach an agreed resolution of this action in the near future.”

The original stay request had been because, as an investor, HWH had objected to the proposed “schemes of arrangement” for the Markel CATCo retro reinsurance funds. As we said at the time, the direction the buyout terms moved in was likely to be critical in the direction the fraud lawsuit eventually took.

With those buy-out terms now improved, it’s possible the investor is more willing to settle with Belisle, knowing that any returns of value from the CATCo funds will now be greater than had been anticipated when the last stay was requested.