Nephila demonstrated itself as an ILS market leader in 2023: Noble, Markel

Nephila Capital had a “fantastic” year in 2023, according to Jeremy Noble, President of Insurance at Markel, who said that the insurance-linked securities (ILS) unit “demonstrated itself as a market leader” and is well-positioned going forwards.

Speaking during Markel’s full-year 2023 earnings call today, Noble pointed to the ILS operations at Nephila Capital, as well as the State National fronting operations, as bright-spots of the last year for the company.

As we reported earlier, in announcing its results Markel highlighted higher insurance-linked securities (ILS) revenues from the managed ILS funds of its Nephila Capital unit in 2023.

The company also highlighted the fact that program premiums ceded to Nephila reinsurance structures have soared, of which a good deal will have come via Markel insurers or the State National business, we assume.

Noble said that, “Both of our non-underwriting businesses, State National and Nephila, had fantastic years.

“State National continues to grow, maintain exemplary discipline around reinsurer credit management and produce exceptional operating margins.

“Nephila demonstrated itself as a market-leader, delivering high-quality, data and insight driven portfolio construction, while deploying innovative strategies to maximise returns for investors.”

Noble went on to say that Markel stands to benefit from Nephila’s success, as its conduit to benefit from rising property reinsurance and catastrophe reinsurance rates.

“Through meaningful improvements in pricing adequacy in the property cat market, Nephila is well-positioned going into 2024 and beyond.

“Note, some of how Markel participates in the recent property market improvements occur outside of our reported combined ratio, and are reflected in our results at Nephila,” he explained.

Noble also said, “Together our ongoing fronting and ILS operations, excluding the impacts of gains on the disposition of subsidiaries in both years, contributed operating income before amortisation of $146 million in 2023, up almost 40% from a year ago. We look forward to continued growth and profitability in these business units.

“Further, we will continue to deploy our world class insurance platforms across underwriting, fronting and ILS, to maximise returns for Markel Group.”

Also read: Nephila fund revenues rise at Markel, cat and specialty ILS programs grow.