Blue Capital Alternative Income Fund Limited is a London-listed closed-end fund (LSE:BCAI) launched in 2012, formerly known as Blue Capital Global Reinsurance Fund Limited. The fund provides qualified institutional and retail investors with the opportunity to access the global catastrophe reinsurance market, and to invest in an alternative asset class whose historical returns have been largely uncorrelated to those of other asset classes including global equities, bonds and hedge funds.
The investment objective of the Company is to generate attractive returns from a sustainable annual dividend yield and longer-term capital growth. The Company targets an annualized dividend yield of LIBOR plus 6 per cent per annum on the Issue Price of the Ordinary Shares and a net return to Shareholders (comprised of dividends and other distributions to Shareholders together with increases in the Company's Net Asset Value) of LIBOR plus 8 per cent per annum to be achieved over the longer term, net of fees.1
Our strategy is to invest substantially all of the assets in shares linked to the segregated account identified as Blue Capital Global Reinsurance SA-1 (the "Master Fund") within Blue Water Master Fund Ltd., an exempted Bermuda mutual fund segregated accounts company.
The Master Fund invests in a diversified portfolio of fully collateralized reinsurance-linked contracts and other investments carrying exposures to insured catastrophe event risks. The Master Fund predominantly invests in fully collateralized reinsurance-linked contracts through preference shares issued by Blue Water Re Ltd. ("Blue Water Re") which is an exempted company incorporated in Bermuda licensed and regulated by the Bermuda Monetary Authority as a special purpose insurer. The Master Fund's investment in other reinsurance-linked investments carrying exposure to insured catastrophe event risks such as industry loss warranties, 144A rated catastrophe bonds and other insurance-linked instruments may be made directly by the Master Fund or indirectly via Blue Water Re.
The Company's investment policy, including investment restrictions, is set out in full in the 2016 Annual Report.
Blue Capital Management Ltd. (Blue Capital), which serves as the investment manager for both the Company and Blue Water Master Fund Ltd., is owned by Sompo International Holdings Ltd. (Sompo International), a wholly-owned subsidiary of Sompo Holdings, Inc. and the successor to Endurance Specialty Holdings Ltd. Sompo International is a recognized global specialty provider of property and casualty insurance and reinsurance and a leading property catastrophe and short tail reinsurer since 2001. Blue Capital therefore benefits from Sompo International's underwriting expertise and successful track record managing a diversified portfolio of property catastrophe exposures through a global network of broker/client relationships.
Sompo International is a leading global specialty provider of property and casualty insurance and reinsurance and has operations in Bermuda, the United Kingdom, Switzerland, Singapore and the United States. Sompo International maintains ratings of A+ (Superior) from A.M. Best (XV size category) and A (Strong) from Standard and Poor's on its principal operating subsidiaries.
Partnership with Sompo International offers a number of advantages including:
- Underwriting expertise across a wide range of products with a proven, sophisticated approach to risk selection;
- Experience managing a global diversified portfolio of insurance and reinsurance products with a successful track record underwriting property catastrophe and short tail exposures since 2001;
- Dedicated analytics, risk management, claims and actuarial teams; and
- The robust operating infrastructure of an established global public company.
Note 1: These are targets only and not profit forecasts. There can be no assurance that these targets will be met or that the Company will make any returns or distributions whatsoever or that investors will recover all or any of their investment. Prospective investors should decide for themselves whether or not the target returns and distributions are reasonable or achievable in deciding whether to invest in the Company.