Specialty insurer Markel Corp. has agreed to acquire all of the outstanding shares of Nephila Holdings, a standalone insurance-linked securities manager.
Nephila, has more than $12 billion of assets under management for over 300 investors. Its revenue is primarily from management and incentive fees.
Richie Whitt, Markel’s co-chief executive officer, said the addition of Nephila to Markel’s insurance, reinsurance, insurtech, fronting and own existing insurance-linked securities capabilities “will enhance and strengthen the breadth and depth of Markel’s offerings to policyholders, producers and investors.”
Upon completion of the deal, the combined assets under management between Nephila and Markel will stand at approximately $19 billion, representing approximately 20 percent of the insurance-linked securities sector, according to the announcement. With this transaction, Markel will become the largest manager of funds in this sector, Whitt said.
The transaction is not subject to any financing condition. Markel said it plans to finance the transaction using cash balances on hand. Further details were not disclosed.
Nephila will continue to operate as a separate business unit. The management team, led by Greg Hagood and Frank Majors, will remain in place and will continue to be based in Bermuda, San Francisco, Nashville and London.
Nephila offers investment products focusing on instruments including insurance-linked securities, catastrophe bonds, insurance swaps, and weather derivatives. Nephila has been managing institutional assets in this space since it was founded in 1998. The firm has 180 employees.
The transaction, which is subject to regulatory approvals, is expected to close in the fourth quarter of 2018.
Skadden, Arps, Slate, Meagher & Flom is serving as legal counsel to Markel. Evercore is serving as exclusive financial advisor to Nephila and Willkie Farr & Gallagher is serving as Nephila’s legal counsel.
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