Markel books $15.7m of Q1 CATCo portfolio favourable development

Markel has once again benefited from a return of value due to favourable loss development on the CATCo retrocessional reinsurance portfolio, booking a further $15.7 million in the first-quarter.

We’ve documented the developments reported through the running off of Markel CATCo’s retrocessional reinsurance portfolios over recent years, with significant value recovered for investors and the ILS managers owner Markel, as loss reserves have proved more than adequate in many cases.

Markel bought out the remaining investors and so any favourable, or otherwise, development on the portfolio at Markel CATCo Re, the investment managers reinsurance vehicle, flows back to the parent now (aside from what happens with the listed fund, as its shareholders remain beneficiaries of positive development moves).

A year ago, Markel reported $44.8 million in favourable loss reserve development on the run-off of reinsurance contracts written by Markel CATCo Re.

There were continued recoveries in value throughout 2023, as evidenced by the latest reporting of the Markel CATCo listed retro investment fund.

Now, Markel itself has revealed another positive effect of this, as $15.7 million in additional value has been recovered due to ongoing favourable development related to the CATCo book.

Markel has now reported that, of the buy-out of investors shares in CATCo, the firm has now received a return of $24.9 million of that initial cash funding it provided.

Markel still has an investment in Markel CATCo Re after the buy-out transaction, totalling $20.1 million, but the company expects all of that could flow back and be recovered if the current loss reserves set for CATCo contracts prove to be sufficient.

Given how losses have developed favourably in almost every case over the last couple of years and how far into the running-off the CATCo retrocessional reinsurance portfolio now is, it seems Markel is likely to recover at least some, if not all of that.

Also read: CATCo listed retrocession investment fund NAV gained 61% in 2023.