14th Aug 2014 13:54
LONDON (Alliance News) - CATCo Reinsurance Opportunities Fund Ltd Thursday reported a net asset value capital return of 4.27% for the first six months of 2014, while the respective return for the original ordinary shares issued on December 2010 was 7.27% following the contingent distribution paid in relation to the 2011 Tohoku, Japan earthquake.
The share price capital return was 4.01%, while the total return of the insurance-linked securities benchmark was 2.41%.
The fund's share price stood at a premium of 0.26% to NAV at the end of June.
"Excess capacity in both property catastrophe reinsurance and retrocession has resulted in a challenging operating environment for participants in 2014 compared to previous years. In a low interest rate environment, the appetite from capital market investors for catastrophe risk remains high and there is a general acceptance that the "new money" is here to stay," Chairman Nigel Barton said in a statement.
"However the flow of new money into the catastrophe risk sector has now slowed down, resulting in a smaller number of new ILS funds, sidecars and collateralised catastrophe writers being formed. As property catastrophe prices soften, we are seeing the ILS sector now diversifying into some other insurance classes in which CATCo does not participate," Barton said.
"While competitive conditions in catastrophe classes persist, we are of the view that CATCo has built a well-diversified portfolio of risks emanating from high-quality clients which, combined together, should generate superior returns for investors over time," Barton added.
By Samuel Agini; [email protected]; @samuelagini
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