Nephila Capital
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Carriers are grappling with a rush of investor interest in longer-tail lines. -
Operating revenues were also up on the $29.1mn reported over Q2.
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The syndicate is targeting capital allocation for 1 January, the company confirmed.
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Hagood will stay on as sole CEO of Nephila Holdings, with Taylor continuing as president.
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The ILS manager revised down slightly its forecast for the syndicate’s 2023 YOA.
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Markel announced the sale of its global reinsurance renewal rights to Nationwide.
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The ILS manager also swung to an operating profit after posting a loss in Q1 2024.
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He joined Nephila in 2023 from Lancashire as a senior underwriter.
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Both syndicates also reported a deterioration in their combined ratios.
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Indirect exposure to cat risk through long-term investors gives Markel optionality.
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The group ceded 55% more premium to Nephila over the year at $1.3bn.
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The top quartile, which includes Nephila 2357, were set to shrink overall.
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Strong growth in fee income builds on the favourable rating environment.
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Fee income fell by 42% to $25.1mn in Q3 over the prior-year quarter.
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Collateralised reinsurance and retro are in the firing line.
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Insurance Insider ILS reported in June that the company had bought substantial ILW coverage.
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Nephila’s income rose steeply owing to changes in its funds’ product mix.
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Aeolus increased its participation on the program more than fourfold.
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He will continue to play a role as a fund director and firm ambassador.
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Traditional reinsurers such as Berkshire Hathaway and Arch pushed for more share, our annual study of Florida cessions shows.
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Parent company Markel said the ILS manager’s performance was subject to a reporting lag.
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Operating revenue at the ILS manager climbed 49% to $19.2mn.
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The coverage will be annual aggregate with an index trigger for wind and quake.
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Increased ILW purchasing reflects cash-rich funds looking to protect return levels.
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Managers have tightened buffer terms and added extension spreads to enhance illiquid strategies.
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The coverage will be for named storm and quake.
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Follow-only specialty Syndicate 2358 has reported a profit in both years since its launch.
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The parent also expects the ILS platform’s AuM to grow.
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The fund manager operations booked management fees of $31mn.
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Of the 18 top-tier ILS managers, 10 recorded growth, while eight were flat or down.
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The year brought a degree of closure on the loss-hit years of 2017-2021, while the outlook remains changeable for ILS managers.
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The firm’s follow-only Syndicate 2358 has grown its stamp by 67% to £150mn.
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A new pooling structure allowed the firm to free up historic side pockets and provides a template for future exit options.
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Prior-year cat loss years that are finally shaking out drove fee benefits in Q3.
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The ILS firm reported $6.8bn of assets under management at the third-quarter mark.
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The industry’s ability to draw new capital will hinge on the outcome of the Atlantic hurricane season.
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Citizens has disclosed that Nephila Capital increased its exposure to the carrier’s reinsurance program by 68% to a total $756mn line.
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The investment firm’s ILS holdings were worth around $746mn at year-end 2022.
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Nephila Syndicate CEO Adam Beatty said that the firm hopes to grow its new specialty syndicate to $500mn of premium within the next few years.
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Markel’s ILS platform maintained assets under management at $7.2bn, down by $200mn from a January figure of $7.4bn.
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The syndicate had the second-lowest combined ratio for 2022.
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The £50mn syndicate made most of its profits in aviation.
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The syndicate’s combined ratio was down for the fifth year in a row.
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The reinsurance and ILS leader joined the firm in 2012 during a “rollercoaster” year for industry loss warranties.
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Reinsurer-owned ILS platforms were challenged to grow fee income in a tough year for nat cat losses and as cat market economics shifted.
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Markel gross written premiums ceded to Nephila grew by 45% year over year to $1bn, including program business.
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The CFO of parent company Markel has said it aims to lean into property cat through Nephila.
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Nephila achieved significant rate increases at 1 January and expected the strong rate environment to continue this year.
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Cat activity and financial market volatility had impacted investor’s allocations to ILS and redemptions, Markel said.
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She had served as director of underwriting at Nephila since mid-2018.
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The incoming president for insurance also highlighted the role Nephila could play in the transition to net zero.
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The firm has folded its former Nimbus weather strategy into the new vehicle.
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The pension investor re-directed capital to the Pillar Opportunity fund as of January 2022.
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The syndicate’s growth headroom is somewhat constrained compared to the Lloyd’s market average.
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Some firms have fared better than others in the competition to raise funds during the year.
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The insurer also emphasized that it realised more than $300mn from selling two MGA operations.
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The ILS platform has dipped to $7.8bn in assets under management, as ILS revenues were down 44% after the sale of Velocity.
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The product protects firms buying carbon credits from third-party negligence and fraud.
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Evanston Insurance Company, a subsidiary of Markel, backed the move.
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The ILS firm reported $8.5bn of assets under management at mid-year.
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The hardening rate environment in Florida provided a mid-year opportunity for some, but overall there was little growth.
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The asset manager also invests in Pimco ILS and has an inactive mandate with Nephila.
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The increase in allocation by the railways scheme contrasts with steady or declining ILS holdings at other UK pension funds.
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The ILS platform delivered stable revenues as Markel spent $102mn on its Catco buyout.
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The firm’s Syndicate 2357 had halved losses to $41.5mn during the year.
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The ILS manager’s Lloyd’s business delivered a $55.5mn profit, on an 86.5% combined ratio.
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The new firm says ESG criteria will be embedded into the products.
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The bond provides annual aggregate industry loss cover for named storm and earthquake.
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The ILS firm’s management fees, however, fell back compared with 2020.
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The new issuance is slightly less risky than 2020’s offering.
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The change in plan comes as Lloyd’s restricts cyber growth.
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The transaction provides reinsurance capital from four pension funds and marks the second use of the Lloyd’s ILS transformer vehicle.
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Despite the drop-off in AuM, Markel boosted ILS operating revenues significantly in the quarter.
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The consultant recommended the pension fund allocate $95mn to Pillar in 2022 after pulling a $41mn mandate from Nephila.
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Both the firm’s underwriting and portfolio management functions will report into her.
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The 2017 start-up has previously focussed on quota share investing.
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SageLink will enable fully automated quoting capabilities for reinsurance.
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The new retro fund launched with $98.9mn after an extended development phase.
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Sources told Trading Risk that a different kind of investor was interested in ILWs compared with retro cat bonds.
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NatWest cited a reduction in relative risk-adjusted returns as it decreased allocations, while North Yorkshire reported outperformance across its trio of ILS investments.
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Her move follows overall leadership change at Nephila Climate.
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The asset manager’s primary platform has previously been using fronting providers and Nephila's Lloyd’s syndicate to access business.
