Markel ups Q1 cessions to ILS unit Nephila 2.7x to 45% of FY21 total

Specialty insurer  Markel has put a hefty share of insurance premium into reinsurance vehicles run by its ILS unit Nephila, increasing first quarter GWP cessions 2.7 times year on year to $315.6 million, the company indicated in its Q1 financial statements.

The Q1 tally represents an acceleration vis-a-vis 2021 when full-year GWP cessions to the unit increased 67% year on year to $689.2 million.

Nephila acts as investment manager to several private funds (not owned or consolidated by  Markel) and also acts as an insu4ance manager to reinsurers and Lloyd's Syndicate 2357 (also not consolidated by  Markel).

Total revenues attributed to those entities managed by Nephila came to $22.4 million in Q1, down 21.7% on the prior year period.

A portion of that decline will have stemmed from the continuing, albeit abating, decline in assets under management at the Nephila-managed funds. That AuM total slipped to $8.6 billion, down from an $8.8 billion measure at end-2021 and $9.6 billion at end-2020.

Another notable chunk of the revenue decline will have followed deconsolidation of unit Velocity which had provided managing general agent services to the Nephila Reinsurers on a commission basis.  Markel sold down that stake in February 2022.

Despite the notable increase in cessions in Q1 (to almost half the 2021 total), the total reinsurance recoverables on the group balance sheet due from Nephila Reinsurers is down some 14% over the course of the quarter.  Markel did not further comment on the releases.

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