Item 5: Fees and Compensation
AlphaCat Managers and/or its affiliates are compensated for the services performed by way of
management fees and performance fees. Because this Brochure is being delivered only to “qualified
purchasers” under the 1940 Act, AlphaCat Managers is not required to provide a fee schedule for
the Funds. The fee rates and method of calculation and payment are set forth in the applicable Fund
Offering Document. Management fees vary between 1 and 1.5% per annum, are calculated and
accrued monthly and payable quarterly in arrears. Performance fees are charged on a percentage of
appreciation above a high water mark, and vary from 0% to 20%, depending on the Fund or Client
vehicle involved. Investors should consult the applicable Fund Offering Documents or investment
management agreement for more detail. Investors bear the cost of fees payable and performance
fees made to AlphaCat Managers as such amounts reduce the pro rata returns. AlphaCat Managers
and its affiliates, may also receive a percentage of the premium in relation to reinsurance products
and insurance underwriting fees.
AlphaCat Managers reserves the right to waive or reduce management fees or performance fees
with respect to any Investor, including its principals, employees and affiliates as may be determined
in AlphaCat Managers’ sole discretion from time to time. In general, investments by principals and
Form ADV Part 2A Brochure March 2023
employees of AlphaCat Managers or their respective affiliates will not be subject to management
fees or performance fees.
Management (or underwriting fees) and performance fees may be charged on investment vehicles
and such fees are negotiated separately for each vehicle.
Management fees and performance fees are deducted from Investors’ assets invested in the Funds.
Investors do not have the ability to choose to be billed directly for fees incurred.
As described above, the management fee generally is paid monthly in arrears, while the performance
fees are paid for each period ending December 31 in each year, or, in the event of a redemption or
withdrawal on a date other than December 31, in respect of the period ending as of the date of such
redemption or withdrawal with respect to the amount redeemed or withdrawn portion.
The Funds are responsible for the fees of their administrator, banks and custodian, as well as all
other ongoing operating costs and expenses of the Funds. Please see Item 12 of this Brochure for
further discussion of brokerage and other acquisition costs. In general, standard brokerage expenses
are 5-10% or less of the premium for collateralized reinsurance transactions. Other expenses
include: administrative expenses (e.g., administrative, legal, accounting, auditing and other
expenses), registration, regulatory and self-regulatory fees, trustee and letter of credit fees in respect
of collateral arrangements, custodial fees, premium or other taxes, and extraordinary expenses, if
any. The foregoing expenses are exclusive of, and in addition to, the management and performance
fees of the Manager. AlphaCat Managers does not receive any portion of the foregoing expenses.
AlphaCat Managers pays its affiliate, AlphaCat Capital, sub-advisory fees based on actual operating
expenses plus a 7.5% mark up and does not charge the Clients or Funds directly for those fees.
Personnel within the Finance Department of Validus Specialty Underwriting Services, Inc., a
subsidiary of Validus Holdings, Ltd., perform the calculation, on a quarterly basis, pursuant to the
service level agreement. The standard applied is that of an arm’s length transaction, which is
applied through the cost plus 7.5% markup as established via transfer pricing studies performed by
internal tax advisors annually and external tax advisors every three years on behalf of the Validus
Group and all of its subsidiaries and affiliates for application to the required public disclosure
requirements for the Validus Group.
Investors should refer to the relevant Fund Offering Documents for a complete understanding of
fees and expenses they may pay. The information contained herein is a summary only and is
qualified in its entirety by such documents.
AlphaCat Managers does not charge Fund or Client fees in advance. Because we do not require
Funds or Clients to pre-pay fees there is no opportunity to obtain a refund.
Neither AlphaCat Managers nor its supervised persons accept compensation for the sale of securities
or other investment products.
Form ADV Part 2A Brochure March 2023