CATCo Releases Year End 2012 Results (Excerpt)

Hamilton, Bermuda – 12 February, 2013 - CATCo Reinsurance Opportunities Fund Ltd. (the "Company”; Ticker: CAT.BH) today released the audited financial results for the year ended 31 December, 2012. A statement by Chairman, Mr. Nigel Barton, stated:

“Welcome to our 2012 Annual Report. In my first statement as Chairman, the twelve month period to 31 December 2012 has been a period of continued progress for the Company. During 2012, the CATCo Group of Companies (the “Group”) consolidated its position as one of the leading companies within the retrocessional reinsurance industry.

Having deployed in excess of $2 billion of collateralised retrocession reinsurance capacity at the beginning of 2013 the CATCo Reinsurance Fund Ltd (the “Master Fund”), demonstrated it is one of the largest providers in its industry.

This is a significant milestone for the Group after two years of operation and demonstrates the demand the industry already has for the type of products the Group offers in a relatively short period of time.

In addition, CATCo Diversified Fund (the Master Fund) and other segregated accounts managed by the Managers, received new investments of approximately USD330 million which were deployed 1 January 2013.

CATCo Reinsurance Opportunities Fund had, at the end of the year, a Net Asset Value of USD353.8 million.

Catastrophic Activity in 2012

Overall, reinsurance industry losses were significantly lower in 2012 than in the previous year, when record figures were posted due to the earthquakes in Japan and New Zealand and severe floods in Thailand.

Global natural disasters in 2012 combined to cause economic losses of $200 billion, just above the ten year average of $187 billion. In total there were 295 separate events during the year, compared to an average of 257. These disasters caused insured losses of $72 billion, about 36% above the ten year run-rate of $53 billion.

Losses in 2012 represented a welcome reduction after the extreme economic and insured losses of 2011. In contrast to 2011, when the largest events occurred in the Asia-Pacific region, the two largest global events of 2012 occurred in the US: Hurricane Sandy and a year long drought. These two events accounted for nearly half of economic losses but, owing to higher insurance penetration in the U.S., 67% of total insured losses globally.

The costliest events outside of the U.S. in 2012 were two earthquakes in Italy’s Emilia-Romagna region during May that struck within nine days of each other and caused significant damage. Flood events in China, typhoon landfalls in Asia and flooding in the United Kingdom were additional notable economic loss events in 2012.

The only other notable non-elemental disaster of 2012 was the partial sinking of the Italian cruise ship Costa Concordia when it ran aground at Isola del Giglio, Tuscany.

Convergence of Capital Markets in the Reinsurance Sector

The convergence of traditional reinsurance and capital markets capacity continues. The influence of capital markets capacity is set to expand strongly over the next few years in the reinsurance sector. This development will provide carriers with additional flexibility to offload and diversify risk and establish capital market solutions as a sustainable complement to traditional reinsurance.

Over the course of 2012, fifty three new international insurers, four new insurance agencies, five new insurance managers and two insurance brokerages were launched in Bermuda alone.

Of the insurers, twenty seven were Special Purpose Insurers and most of these have been formed to undertake some kind of fully collateralised reinsurance often with third-party capital backing them. This clearly shows how popular reinsurance activity has become as an asset class among third-party capital investors.

However, very few of these new entrants were retrocessionnaires and as a consequence do not compete with the Company’s investment strategy.

Total Returns and NAV Performance

The 2012 investment portfolio generated a total return of 7.06 percent to Shareholders without exposure to the 2011 New Zealand and Japan earthquakes (previously C Share investors). See note 10 for performance breakdown of differing share classes.

Since CATCo’s inception the Company has completed three significant fund raisings leading to NAV total return calculations for differing share classes. The NAV calculations included both the 2011 dividend and the deduction of the 2012 Sandy Loss Reserve.

The NAV total returns by share class, with their event exposures, are listed below:

• Ordinary Shares issued on 20 December 2010: +2.41% (Exposed to Japan/NZ Quakes, Costa Concordia, Hurricane Sandy)
• C Shares Issued on 20 May 2011: +19.51% (Exposed to Costa Concordia and Hurricane Sandy)
• C Shares issued on 16 December 2011: +7.40% (Exposed to Costa Concordia and Hurricane Sandy) 


Conversion of C Shares

In August 2012 the Board announced it had completed the consolidation of the Company’s share classes into one class of Ordinary Shares.

2012 Annual Dividend

At the launch of the Company, the Board of Directors indicated its intention to pay an annual dividend in respect of any Fiscal Year of an amount equal to LIBOR plus 5 per cent of the Net Asset Value as at the end of the relevant Fiscal Year.

On 9 January 2013, the Board of Directors indicated their intention to pay an annual dividend of $0.05006 in respect of the Ordinary Shares.

The record date for this dividend was 18 January 2013. It is expected that this final dividend will be paid to shareholders in March 2013, subject to shareholder approval at the forthcoming Annual General Meeting.

Good Corporate Governance

The Board of Directors is resolved to maintain high corporate governance standards with particular focus on ensuring that the Company is operating in the best possible interests of shareholders. This includes regularly evaluating the relationship and effectiveness of the Investment Manager. During 2012, The Bermuda Monetary Authority completed a full audit of the Investment Manager without any significant matters being raised. The Board places a high emphasis on risk management and assesses internal controls each year.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of Section 1 of the Governance Code, except the Governance Code provisions relating to:

• The role of the Chief Executive (A.1.2)

• Executive Directors’ remuneration (B.2.1 and B.2.2)

• The need for an internal audit function (C.3.5)

For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions are not relevant to the position of CATCo Reinsurance Opportunities Fund Ltd., being an externally managed investment company.

The Company has therefore not reported further in respect of these provisions.

Acknowledgement and Board Changes

I would like to acknowledge the valuable contribution and support provided to the Board of Directors, and Managers, by Anthony Taylor our retiring Chairman.

The Board of Directors was strengthened in
May 2012 with the appointment of Ms Margaret Gadow who has over twenty three years’ experience in investment management. Her appointment compliments the Board’s experience and broadens its knowledge of the industry.

Regular dialogue with the Company’s shareholders is encouraged and I would like to remind shareholders that CATCo will be repeating its Investor Day presentation in London again during September 2013 and, my Directors and Managers would welcome your attendance.

2013 Investment Portfolio Deployment

The Managers, on behalf of CATCo Re Ltd., have agreed terms on retrocessional reinsurance transactions with multiple reinsurance counterparties predominantly with Lloyds of London Syndicates and traditional reinsurers that have utilised approximately 98% of the available capital received from existing and new investment in the Company, the Master Fund and other separately managed Investment Funds.

The Company and Master Fund’s reinsurance portfolio contains a significantly diverse set of global risk pillars. The Company’s diversified portfolio exposure, including reinsurance protections, ensures that the impact to a single loss event, no matter the magnitude of the event, results in positive net portfolio returns for investors in 2013 with the exception of the worst US Hurricane event which results in a potentially small negative net return.

Shareholders

I would like to thank shareholders for their continued support and please do not hesitate to contact the Company, or our Managers, if you have any questions regarding your Company.

You are invited to attend the Annual Investor Day in London, United Kingdom in September when I will have a chance to meet you as well as receive the latest update from the Manager.”

Nigel Barton

Chairman

For the full text of this release please visit http://www.catcoim.com/ or contact:

Jason Bibb, Director

Telephone: +1 (441) 531 2227

Email: jason.bibb@catcoim.com

Mark Way, Corporate Communications

Telephone: +44 7786 116991

Email: mark.way@catcoim.com

David Benda / Hugh Jonathan

Numis Securities Limited

Telephone: +44 (0) 20 7260 1000

John Whiley / Matthew Charleson

Prime Management Ltd

Tel: +1 (441) 295 0329