Markel Completes Acquisition of Investment Manager Nephila

November 15, 2018

Specialty insurer Markel Corp. has completed its acquisition of Nephila Holdings, an investment manager specializing in reinsurance risk.

According to the transaction that was first announced in August, 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.

Details were not disclosed Markel has said the transaction was not subject to any financing condition and that it would to finance it using cash balances on hand.

Nephila has assets under management of approximately $12.3 billion. 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, according to Richie Whitt, Markel’s co-chief executive officer.

“The addition of Nephila to Markel’s insurance, reinsurance, insurtech, fronting, and existing insurance-linked securities capabilities will enhance and strengthen the breadth and depth of Markel’s offerings to policyholders, producers, and investors,” Whitt said.

Fitch analysts have noted that in a time of reinsurance consolidation, the deal allows Markel to further expand into the more fee-based insurance-linked securities (ILS) sector, solidifying its position as the leading manager of ILS funds. In 2015, Markel purchased CatCo, a retrocession and reinsurance investment specialist, demonstrating the further convergence of traditional (re)insurance and alternative capital market reinsurance.

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