Markel Corporation is to acquire all of the outstanding shares of Nephila Holdings, the largest manager of catastrophe and weather insurance and reinsurance linked investment funds in the world.
The combined entities will represent some 20 percent of the ILS sector and Markel will also become the largest manager of funds in this sector.
Nephila manages $12.2bn of assets under management (AuM) for a geographically diverse investor base of more than 300 investors. The combination of Nephila and the specialty insurance and reinsurance platforms and operations of Markel, is expected to result in a powerful entity that will drive long-term growth and bring value to the companies’ investors.
Nephila Capital will continue to operate as a separate business unit following completion of the deal, which remains subject to regulatory approvals and other customary closing conditions.
The management team, led by co-CEO’s Greg Hagood and Frank Majors, is to remain in place and will continue to be based in Bermuda, San Francisco, CA, Nashville, TN and London.
CEO of Markel, Richie Whitt, said: “We are excited to welcome Nephila to the Markel team. Frank Majors and Greg Hagood have built the industry’s pre-eminent and longest-tenured insurance-linked securities manager. With a proven 20 year track record of success, they bring with them an incredibly experienced and talented management team and a culture of creativity, innovation and excellence that exemplifies the Markel Style.
“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.”
Majors added: “We are delighted to be joining Markel, a company with a similar culture, strategic outlook and long-term focus. They have built a great company with a sterling reputation for both outstanding performance and a collaborative business approach, and have a proven track record of successful acquisitions.
“Markel shares our strategic vision for the future of the insurance markets; this transaction will allow us to accelerate our delivery of that strategy, creating additional value for our investors and our trading partners. We are looking forward to working with the Markel team, and are excited by the possibilities from our combined strengths.”
Hagood said: “As the industry continues to evolve, we believe the resources and expertise from both platforms will provide meaningful benefits to our investor base, as it combines the investment independence of a 20 year, stand-alone insurance-linked securities manager with the additional resources of a well-respected and strongly rated insurer. We are excited about leveraging these joint resources on behalf of our investors in the years ahead.
The transaction is expected to close in the fourth-quarter of this year, and is not subject to any financing condition, and Markel plans to finance the transaction using cash balances on hand.