Blue Capital Alternative Income Fund Limited (the “Company”) invests in a diversified portfolio of fully collateralized reinsurance-linked contracts and other investments carrying exposures to insured catastrophe event risks. The Company does so by investing in Blue Water Master Fund Ltd. (the “Master Fund”), which in turn invests in Blue Water Re Ltd. (the “Reinsurer”). As such, the performance of the Company and its shares (the “Shares”) will be subject to the risks attributable to the Master Fund and the Reinsurer, which in turn are dependent on, among other factors, the occurrence or otherwise of catastrophic events and the effects of such events on insured property.
The Company has no control over the investments made by its manager, Blue Capital Management Ltd. (the “Investment Manager”), and is reliant on the skills and capabilities of such persons for its performance.
The Master Fund shares in which the Company invests have no public market and are subject to limited redemption and transfer rights, including the ability of the Master Fund’s directors to suspend redemptions and/or establish special memorandum accounts in respect of, among other things, reinsurance contracts written by the Reinsurer that are the subject of a covered or other pre-determined event. The Company may therefore experience significant delays in the redemption of Master Fund shares and may be unable to redeem Master Fund shares for an indefinite period of time. Consequently, the Company may not be able to raise cash to enable it to pay distributions to its Shareholders (the “Shareholders”) or meet other liabilities.
The success of the Company depends heavily on the financial and managerial experience and availability of the management team associated with the Investment Manager.
The fees payable to the Investment Manager may create incentives that are not in the interests of the Company and may therefore adversely affect investment returns.
The Company has been established as a closed-ended mutual fund and, accordingly, Shareholders will not be able to redeem their new Shares. Shareholders must rely on the existence of a liquid market in the Shares to realize their investment
Although the Shares trade on the Specialist Fund Market of the London Stock Exchange and are freely transferable, the ability of Shareholders to sell their Shares in the market, and the price which they may receive, will depend on market conditions.
The market value of, and the income derived from the Shares can fluctuate and may not always reflect the prevailing net asset value per Share.