Nephila Pursues $100M Atela Re Catastrophe Bond

Nephila Pursues $100M Atela Re Catastrophe Bond

April 8, 2024 : Nephila Capital, a prominent insurance-linked securities (ILS) investment manager under the ownership of Markel Corporation, is making a significant move in the catastrophe bond market. The company is actively seeking to secure a substantial amount, potentially exceeding $100 million, in retrocession reinsurance for Lloyd’s Syndicate 2357. This ambitious endeavor is being pursued through the issuance of an Atela Re Ltd. (Series 2024-1) catastrophe bond.

Retrocessional reinsurance functions as a layer of protection for insurance or reinsurance companies. In this instance, the Atela Re 2024-1 cat bond would transfer potential financial losses associated with catastrophe events from Lloyd’s Syndicate 2357 to investors who purchase the bond.

The ceding reinsurer for the cat bond will be Nephila Syndicate Management Limited, the managing agent responsible for operating two syndicates within the Lloyd’s market specifically geared towards Nephila’s ILS strategies. However, the bond’s catastrophe coverage is designated solely for Lloyd’s Syndicate 2357. This syndicate is Nephila’s longest-standing underwriting operation within the Lloyd’s market, and it reportedly achieved a market-beating combined ratio in 2023.

It is understood that Atela Re Ltd. will issue two tranches of Series 2024-1 cat bond notes. Collectively, these tranches will represent a target issuance size of $100 million and will provide two distinct layers of retrocessional reinsurance coverage.

Using catastrophe bonds allows insurance and reinsurance companies to enhance their risk management capabilities. By transferring potential losses associated with catastrophic events to capital markets, these companies can bolster their financial resilience and free up capital for other purposes.

Nephila Capital’s decision to seek catastrophe bond coverage for Lloyd’s Syndicate 2357 underscores its commitment to proactive risk mitigation strategies within its ILS portfolio. The Atela Re 2024-1 cat bond issuance is anticipated to generate significant interest from investors seeking exposure to the ILS market and the potential for attractive returns.