Blue Capital Releases Half Yearly Report
In a filing with the Bermuda Stock Exchange, Blue Capital Global Reinsurance Fund Limited announced results for the six month ended 30 June 2015. The Half Yearly Report is available from the Company’s website bcgr.bm.
Chairman,John R. Weale reported:
On behalf of the Board of Directors [the “Directors”] of Blue Capital Global Reinsurance Fund Limited [the “Company”], I am very pleased to present the Company’s interim report for the six month period ended 30 June 2015.
Capital Deployment
The Company’s investment in Blue Capital Global Reinsurance SA-I [the “Master Fund”] at 30 June 2015 was US$212.9 million, representing all of the Company’s capital excluding that retained for working capital purposes.
As at 30 June 2015, the Master Fund has invested approximately 95% of its deployable assets in reinsurance-linked instruments and preferred shares of Blue Water Re Ltd. [the “Reinsurer”], which in turn has deployed US$191.1 million of funds across 112 different positions and 47 different clients. The bulk of the Master Fund’s remaining deployable capital was invested in further preferred shares issued by the Reinsurer during July 2015. A further breakdown of the exposure of the portfolio is set out in the Investment Manager’s Report, below.
Performance
During the first half of 2015, the net asset value [‘NAV”] of the Company’s Ordinary Shares increased by approximately 1.9% after the impact of dividends declared. The NAV per Ordinary Share moved from US$1.0882 at 31 December 2014 to US$1.0751 per share, with a US$0.033 per share dividend declared in January 2015 and paid in March 2015. The Ordinary Shares traded at an average discount to their Net Asset Value of 3.91%. As described in the Investment Manager’s Report below, most of the portfolio has been allocated to U.S. wind-related risks, for which the premiums are earned between July and October.
The Company benefitted from a low level of loss activity during the first half of 2015. Loss events, including adjustments to losses incurred in previous years, reduced the Company’s NAV by approximately US$0.005 per Ordinary Share.
Dividend
As noted above, the Company declared a dividend of US$0.033 per Ordinary Share in January 2015, which was paid in March 2015. On 15 July 2015, the Company declared a dividend of US$0.033 per Ordinary Share, which was paid in August 2015. The Directors’ current intention that, save for unforeseen circumstances, the second distribution in respect of the six months ended 31 December 2015 [expected to be paid in March 2016], will be for approximately the same amount. [This amount is a target only and not a profit forecast. There can be no assurance that this target will be met or the Company will make any distributions at all.]
Investment Manager
Montpelier Re Holdings Ltd., the parent company of Blue Capital Management Ltd. [“the “Investment Manager”], announced on 31 March 2015 that it has entered into a definitive merger agreement pursuant to which it would be acquired by Endurance Specialty Holdings Ltd. [“Endurance Holdings”]. The merger was completed on 31 July 2015 resulting in Endurance Holdings becoming the ultimate parent holding company of the Investment Manager. Endurance Holdings is a recognized global leader in property and casualty insurance and reinsurance.
Outlook
Looking ahead to the second half of the year, while little direct reinsurance will be bound prior to the January renewals, the Investment Manager will continue to look for opportunities to improve our portfolio and position us for the upcoming renewal season.
The Company is pleased with the diversified portfolio that the Investment Manager has created, which has attractive risk-adjusted return characteristics, consistent with the investment objectives.
On 13 May 2015, shareholders approved all the resolutions at the Annual General Meeting, including the resolution to allot new shares for cash for the purposes of the 2016-2017 Placing Programme. The Directors will consider putting in place such a programme in due course, subject to the level of demand for the Company’s shares.
John R. Weale
Chairman
