Markel pushes record premium of $318m into Nephila ILS in Q2

Specialty insurer  Markel continued to pump a hefty share of premium into reinsurance vehicles run by its ILS unit Nephila, increasing second quarter GWP cessions 70% year on year to a record $317.7 million.

The Q2 tally is a fractional increase on the Q1 sum and leaves the H1 total just over twice the cessions made in the prior year period. After six months, total cessions have risen to 92% of the FY2021 total.

Nephila acts as investment manager to several private funds (not owned or consolidated by  Markel) and also acts as an insurance manager to reinsurers and Lloyd's Syndicate 2357 (also not consolidated by  Markel).

Total revenues attributed to those Nephila-managed entities came to $17.5 million in Q2, down nearly 60% year on year. Expenses were down some 20% and the segment swung to a negative gross margin.

The decline comes as  Markel spent its first full quarter without MGA Velocity on its books after the mid-Q1 2022 disposal.

A slight reduction in AuM at Nephila - from $8.6 billion at end-Q1 to $8.5 billion at last measure - will also have trimmed ILS-based revenues.

Markel has likewise agreed to sell its controlling interest in the Volante managing general agent operations which also sourced business for Nephila. That deal is slated to close in Q4.

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